Notes to the financial statements as of December 31, 2013

Transcription

Annual Report
looking ahead is the key for progress…
Contents
3 Vision
3 Mission
4 Otokar in Brief
6 1963-2013 Milestones
8 Otokar’s Competitive Advantages
10 Otokar’s Operational Lines
12 Key Indicators
16 Chairman’s Message
34 Corporate Governance
63 Report by the Committee
Responsible from Audit
37 CV’s of Nominees for the Board of
Directors
65 Independent Auditors’ Report
38 Declarations of Independence of
the Board of Directors Nominees
124 Information Document
39 Remuneration Policy
18 Board of Directors
40 Independent Auditor Report on
Annual Report
20 Senior Management
41 Meeting Agenda
22 2013 Activities
42 Board of Directors Report
24 Commercial Vehicles
46 Profit Distribution Policy
24 Public Transportation
47 Profit Distribution Proposal
25 Logistic Vehicles
48 Legal Disclosures
26 Defence Industry
28 R&D Operations
49 Corporate Governance Principles
Compliance Report
29 Productivity Operations
58 Risk Management
30 After Sales Services
60 Internal Control System and
Internal Audit
31 Toward the Future…
32 Sustainability
32 Corporate Social Responsibility
32 Environment
33 Human Resources
62 Reports and Financial Statements
36 Members of the Board of
Directors and Committees
60 Report on Related Parties
61 Report on Affiliated Companies
67 Financial Statements and Notes
The most important attributes which have
made placed Otokar in the position it is
today are its dedication to always stand by
its customers, and to produce solutions
for their expectations, needs and requests
in the most ideal manner.
As one of the building blocks in the development of the Turkish automotive industry, Otokar
has lit the torch which it has been carrying with the same excitement and belief for 50 years.
During this long journey, Otokar broke a great deal of new ground and achieved major
success in Turkey and in the world, and has now reached a level in both the trade sector and
defence industry that we must all be proud of.
Developing its own technologies and maintaining a national and domestic identity in its
products, Otokar aims to ensure continuous satisfaction of its customers, employees and
partners with its philosophy of perfection in every area.
Thanks to its advanced R&D facilities and specialized and experienced workforce, Otokar is
equipped with all the necessary competencies to achieve its targets.
OTOKAR 2013 Annual Report
1
Introduction
Activities
Sustainability
Looking ahead is the key for progress…
Our aim is to progress unwaveringly with our
experience and vision... By researching, by
developing and by producing...
2
Corporate Governance
Financial Information
Vision
Mission
Otokar preserves the local
and national characteristics of
its products by developing its
technology in-house, and aims
at the continued satisfaction of
its customers, employees, and
shareholders by embracing a
total excellence philosophy.
The key mission of Otokar is
to design, manufacture, and
market commercial vehicles
and various defence industry
products developed in line with
customer expectations that
have global competitive power.
Other Information
3
Introduction
Activities
Sustainability
Turkey’s Main Battle Tank Altay
8.5 tons Otokar Atlas light truck
Otokar was founded to manufacture
Turkey’s first busses in 1963, as part
of the first steps aimed at Turkey’s
industrialization and modernization.
Initially, the Company produced busses
and minibuses; after 1984, with its
merger with the Koç Group in 1976, the
decision was taken to specialize in other
segments of industry.
Today’s Otokar is a company specialized
in design, development and system
integration of vehicles and platforms
in the land systems. Otokar holds the
intellectual property rights for tactical
wheeled armoured vehicles and tracked
armoured vehicle, while bringing
developed R&D facilities into use for the
whole sector. Moreover, Otokar develops
various vehicle sub systems including
turret systems to complement its land
vehicles, and uses them in its products.
Otokar in Brief
Otokar’s greatest success
has been its competence
in transforming design,
engineering and R&D
capability into a product
expeditiously through its
proactive approach.
552,000 m
2
Plant area
Otokar operates on a 552,000 square meter
plant in Arifiye, Sakarya.
Certificate and
Management Systems i
• ISO 9001 Quality Management
System
• ISO 14001 Environmental
Management System
• ISO 27001 Information Security
Management System
• AQAP 2110 NATO Quality
Assurance Certificate
• Facility Security Certificate with
National and NATO Secrecy Degree
4
In addition to its ongoing bus and
minibus production, Otokar took the
decision to enter the defence industry in
1987. This represented a new era with
the manufacture of Turkey’s first tactical
wheeled armoured vehicle, and Otokar
has today reached the position of being a
pioneer in Turkey with the largest private
capital in the defence industry.
Since its foundation, Otokar has led
the way for 50 years and constantly
expanded its technological know-how,
production capacity, R&D competence
and product range.
In addition to these products, the
main battle tank, the “Altay”, which
was designed and developed by the
prime contractor Otokar, has been
materialized in line with the needs of the
Turkish Armed Forces by using national
opportunities and resources. Thanks
to the Altay tank, which is a design,
prototype and qualification project, Turkey
has not only attained a main battle tank
with intellectual property rights, but also
has gained the substructure of designing
and manufacturing one of the most
complicated land system.
~2,300
60+
Number of employees
Number of countries served
Otokar boasts human resources that can
use state-of-the-art technology, are aware of
customers and service, open to continuous
learning and progress, and who are
experienced and qualified.
Otokar is a global company serving more than
60 countries in 5 continents.
Otokar is manufacturing in two main
fields - city transportation and tourism
transportation - in the bus segment
with its large product range extending
from 5.8-meter to 12-meter long buses
of various passenger capacities. The
company is especially differentiated in
the integrated solutions area in city mass
transportation.
Otokar added a new licensed light weight
truck called the “Otokar Atlas” with an
8.5 tons provisional weight to its product
range, and began to operate in the light
weight truck segment in 2013.
Otokar has stepped up its endeavours in
the design of alternative fuelled busses in
recent years and manufactured Turkey’s
first hybrid bus, called the “Vectio (Doruk)
Hibra”, Turkey’s first natural gas operated
medium-size bus, the “Vectio CNG
(Doruk DG)”, and Turkey’s first electric
bus, the “Vectio Electra (Doruk Electra)”.
Otokar produces vehicles for various
categories from dry cargo transportation
to frigorific transportation and from
container transportation to hazardous
material transportation in line with
international standards. Otokar produced
Turkey’s first tanker semi-trailer with the
ADR certificate in hazardous material
transportation, as well as safe and
hygienic solutions in food transportation
with its frigorific trailers.
Other Information
Otokar’s large product range is popular
not only in Turkey, but in also in foreign
markets over five continents and in more
than 60 countries.
Otokar’s 12-meter Kent municipal buses
900
Bus order from the Istanbul
Municipality
900 Kent municipal buses delivered to Istanbul
Metropolitan Municipality, İETT (Istanbul
Electricity, Tramway and Tunnel General
Management).
5
Introduction
Activities
Sustainability
1963-2013 Milestones
1960s
1970’s
1980’s
1990’s
1963
Otokar was established under
the name Otobüs Karoseri
A.Ş. in Bahçelievler, Istanbul.
1970
Minibuses suitable for public
transport were developed and
manufactured.
1980
Turkey’s first armoured
money transport vehicle was
developed and manufactured.
1964
Turkey’s first intercity bus
was manufactured under the
Magirus license.
1976
Joined the Koç Group of
Companies.
1984
Company’s name changed
to “Otokar Otobüs Karoseri
Sanayii A.Ş.”
1990
Turkey’s first tactical
wheeled armoured vehicle
manufactured, and Turkey’s
first tactical armoured vehicle
exported.
1967
Small-size buses were
manufactured for the first time.
1968
Apollo buses were
manufactured.
1987
Manufactured tactical wheeled
vehicles under the Land Rover
UK license, and won the first
major order for these vehicles.
1995
Initial Public Offering.
1997
Relocated to 86,000 m2 plant
in Sakarya.
Passenger buses manufactured in 1967
6
2000’s
2002
Merged with Istanbul
Fruehauf A.Ş.; developed and
manufactured the Navigo, the
first small bus, and captured
the number two market share
position during the first year of
production.
2003
Manufactured Turkey’s first ADR
certificated semi-trailer tanker.
2004
Established the Otokar R&D
Centre.
2005
Added the Armoured Internal
Security Vehicle to the
product range; developed and
manufactured semi- trailers
under the Otokar brand.
2007
Developed and manufactured
the Vectio, medium-size bus;
launched Turkey’s first hybrid
bus.
2008
•Selected as the prime
contractor for the
development of the modern
main battle tank to be
manufactured domestically, in
line with the needs of Turkish
Armed Forces.
•Expanded total production
area to 552,000 m2.
2009
•Added the Kaya, a mine
resistant armoured vehicle, as
well as the Kent 12-meter city
bus, and M-2010 minibus to
the product range.
•The Vectio model won the
“Design Turkey Award”, and
the “Busworld Kortrijk Grand
Award” in Europe.
•The Company’s name
changed to “Otokar
Otomotiv ve Sanayi A.Ş.”
2010’s
2010
•Added the Arma 6x6, a
multi-wheeled armoured
vehicle, to the product range,
receiving two export orders
in the first year.
•Became the best-selling
bus brand in Turkey in
2011, 2012, and 2013
consecutively.
Other Information
2013
•Celebrated its 50th
anniversary.
•Started production of the
light weight truck.
•Started production of
tracked armoured vehicles
•Became the market leader
in the bus market for the 4th
time.
Since its foundation,
Otokar has led the
way for 50 years
and constantly
expanded its
technological knowhow, production
capacity, R&D
competence and
product range.
2011
•Kent city bus won the “Jury’s
Special Award” within the
scope of European Coach
Week. Addition of the Arma
8x8, an armoured combat
vehicle, to the product
portfolio.
•Displayed a full-scale model
of the Altay national tank to
the public for the first time.
•Establishment of Otokar
Europe.
2012
•Opened the Otokar Tank Test
Centre.
•Launched Turkey’s first
electric bus.
•Introduced preliminary
prototypes of the Altay tank.
•Received an order for 900
buses from the Istanbul
Metropolitan Municipality,
IETT (Istanbul Electricity,
Tramway and Tunnel General
Management).
Otokar Arma 6x6 (2010)
7
Introduction
Activities
Sustainability
Otokar’s Competitive Advantages
Products that Otokar
owns the intellectual
rights
Independence to develop
products according to
the markets’ needs
Publicly traded
Transparent structure,
reliability
Operating in niche
markets
Sustainable growth
R&D capabilities and
flexible manufacturing
ability
Swiftness in developing
new products and serve
the market
Ability to serve
according to needs
Guarantee of customer
satisfaction
•A global
company,
holding intellectual
property rights with
its products in use
on 5 continents and
in more than 60
countries •Turkey’s largest
private company in
the defence industry
•The leading
supplier of land
systems for the
Turkish Armed Forces
•Turkey’s market
leader in the +25
100% local capital
8
Advantages in
national projects
passengers capacity
bus segment for the
last 4 years
Other Information
9
Introduction
Activities
Sustainability
Otokar’s Operational Lines
Defence Industry
Commercial
Vehicles
Products
Public Transportation
Buses
Otokar has Turkey’s widest product range
in city passenger transportation, ranging
from 5.8-meter minibuses to 12-meter city
buses. Otokar maintains its leadership in
the tourism and personnel transportation
segment through creating a new niche
market for itself in Turkey.
Centro/M-2010, Tempo, Navigo/Sultan
(Navigo C, Navigo U, Navigo T), Vectio/
Doruk (Vectio C, Vectio U, Vectio T), Kent
C, Territo U
Logistic Vehicles
Trailer, Semi-trailer
Having added the trailer and semi-trailer
vehicles to its product range through the
merger with İstanbul Fruehauf Taşıt Araçları
back in 2002, Otokar is among the leading
manufacturers for the transportation and
logistics sector through “Otokar” and
“Otokar-Fruehauf” branded trailer and
semi-trailers.
Otokar-Fruehauf Curtainsider Semi-Trailer
(Tırliner, Speedslider, Mega Speedslider,
Euroslider),
Otokar-Fruehauf Frigorific Semi-Trailer
(Iceliner),
Otokar-Fruehauf Tanker Semi-Trailer with
ADR and above-truck applications,
Otokar-Ecotır, Otokar-Ecoliner, Otokar-Plato,
Otokar-Duet,
Otokar-Kontena, Otokar-Spira
Operates in the light weight truck segment
with 8.5 tons Otokar Atlas trucks.
Light Truck
• Otokar Atlas Long Chassis
• Otokar Atlas Short Chassis
Defence
Industry
Otokar is one of the world’s leading design
and production bases in terms of land
defence systems. The Otokar vehicles are
used not just in Turkey but also throughout
the world.
Otokar vehicles are produced on an order
basis whose intended purpose varies
depending on the personnel capacity and
required level of protection.
Designed and produced by Otokar, turret
systems that are suitable for various
missions are also included in the Otokar
product range.
10
Tactical Wheeled Armoured Vehicles
Otokar APV (Armoured Patrol Vehicle), Ural,
Cobra, Cobra II, Arma 6x6, Arma 8x8, Kaya,
Kaya II, Kale, Armoured Internal Security
Vehicle, Discreetly Armoured Tactical Vehicle
Tracked Armoured Vehicles
Tulpar Light Tracked Armoured Vehicle, Altay
Main Battle Tank
Turret Systems
Mızrak RCT, Keskin RCT, Open Turrets,
Internal Security Turret, Üçok, Bozok, Başok
Other Information
Developments in 2013
Became the market leader in the Turkish
bus market for a 4th time.
The 7-meter “TEMPO” model bus,
designed as a shuttle bus and for
personnel transport, was added to the
product mix.
900 Kent model city bus was delivered to
the Istanbul Metropolitan Municipality.
Otokar medium-size bus Doruk
The production of licensed Otokar Atlas
light trucks was started. Approximately 200
vehicles were sold.
The Otokar maxi sectioned tanker was
included in the semi-trailer tanker family
and the tanker product range was
completed.
Received Design Approval Certificates
from the Turkish Standards Institution for
semi-trailers.
Curtainsider semi-trailer added to the
product range which is suitable for railway
transportation.
Otokar curtainsider semi-trailer
Tulpar, Turkey’s first tracked armoured
vehicle, was introduced.
Ural and Cobra II added to the product
range.
Üçok, Başok and Bozok turrets were
introduced in turret systems segment.
Test studies of the preliminary prototypes of
Altay Main Battle Tank continued.
Otokar Arma 8x8 armoured combat vehicle
11
Introduction
Activities
Sustainability
Key Indicators
Summary Financial Information
Sales Volume Sales Revenues (unit)
(TL million)
Domestic
5,554
Gross Profit
Exports
(TL million)
1,402
315
1,004
223
890
196
Change
2012-2013
Change
2012-2013
Change
2012-2013
34%
40%
40%
5,507
226
4,138
260
164
1,176
744
726
2011
2012
2013
2011
2012
2013
2011
2012
2013
Net Profit
Total Assets
Shareholders’ Equity
(TL million)
(TL million)
(TL million)
97
1,375
273
242
76
855
55
2011
12
2012
213
1,037
Change
2012-2013
Change
2012-2013
Change
2012-2013
28%
33%
13%
2013
2011
2012
2013
2011
2012
2013
Other Information
Financial Ratios
R&D Indicators
Liquidity Ratios
2012
2013
Current Ratio (Current Assets/Short Term Liabilities)
1.28
1.16
Liquidity Ratio (Current Assets-Inventories/Short Term Liabilities)
0.81
0.73
Financial Leverage Ratios
2012
2013
Total Debt to Total Assets Ratio (Short Term Debt + Long Term
Debt/Total Assets)
0.77
0.80
Equity/Total Debt Equity/(Short Term Debt + Long Term Debt)
0.30
0.25
Profitability Ratios
2012
2013
Sales Profitability Ratio (Pre-Tax Income/Net Sales)
0.08
0.08
Return on Assets (Pre-Tax Income/Total Assets)
0.08
0.08
Return on Equity (Net Profit/Shareholders’ Equity)
0.32
0.35
4.2%
The ratio of R&D spending
in revenues over the last 5
years
95%
The share of Otokar
designed vehicle sales in
turnover
TL 229 million
Main Ratios (%)
Gross Profit Margin
Operating Margin
EBITDA Margin
2011
2012
2013
22
22
22
8
11
11
11
14
14
Pre-Tax Income Margin
7
8
8
Net Margin
6
8
7
Total R&D spending over the
last 10 years
81
Number of patents and
industrial designs owned
Productivity Indicators
164
50%
Number of projects
developed in 2013 in order
to improve productivity
The quality improvement
ratio achieved in production
processes throughout 2013
Corporate
Governance Rating
Note
9.10
13
Introduction
Activities
Otokar:
100% local
ownership…
Sustainability
Ownership Structure
Ünver Holding A.Ş. Koç Holding A.Ş.
25%
45%
Listed
30%
… generating
value for
Turkey …
Production Volume
Number of Employees (unit)
(persons)
5,676
5,609
4,040
2011
2012
2,281
2,264
2012
2013
1,519
2013
2011
Export Revenues
… a global
brand.
(USD million)
146
117
96
•Otokar brand vehicles
used in more than
60 countries in 5
continents
•Sales and service
network expanded to
more than 200 points
2011
14
2012
2013
Other Information
Otokar, whose wide product range is
demanded not just in Turkey but also abroad,
sells its vehicles to more than 60 countries in
5 continents.
Sakarya Arifiye Plant
Total Area
552,000 m²
Capacity
4,200 Land Vehicles
900 Tactical Armoured Vehicles
4,600 Buses
1,400 Trailers and Semi-trailers
15
Introduction
Activities
Sustainability
Chairman’s
Message
Kudret Önen
Chairman
There are two main values
behind the success that
Otokar has currently
reached: focusing on a
niche market and standing
alone as an independent
manufacturer.
Esteemed shareholders and
stakeholders,
Looking ahead is the key for
progress.
We round up a year which was marked
by ongoing changes in global economic
balances, challenges and opportunities.
On the whole, with the 9% growth in the
Turkish Automotive Industry, 2013 was
a positive year. In defence industry, the
precedence and support offered to the
domestic industry paved the way for a
good outcome. This tendency provided
defence industry manufacturers with
competitive advantages over foreign
producers. Meanwhile, a recovery started
to take hold in the European commercial
vehicle market.
We said “Looking ahead is the key for
progress”, and we focused on needs in
the market which had not been identified,
and we took heed and pioneered
products to meet these needs; we tried
hard to understand our customers’
expectations. We aimed to support the
extension of our authorized dealers,
authorized servicers and suppliers by
increasing the variety of our services
thanks to our innovations. Backed by
our engineering competence, R&D
experience and successful test centres,
we developed new products and entered
new business areas. We directed 4%
of our revenues to R&D expenses and
increased our product range with new
vehicles. We were one of the top 20
companies according to the number of
patent applications.
As Otokar, we had a successful year by
utilizing the opportunities and creating
new opportunities with our innovations
and services. We attained a record 40%
rate of revenue growth in what was our
50th year of operation. We realized a 34%
increase in sales volumes, with the sale
of 5,554 vehicles. We outperformed the
wider automotive sector, and affected
the change in the market in a positive
manner.
In the bus segment, we served more
than 30 countries, particularly in Europe;
in the defence industry, we continued to
serve approximately 30 countries in 5
continents with our products. We strived
for strengthen our position in the market.
We recorded USD 117 million of exports
during 2013.
16
We became the best-selling bus brand
in Turkey for the fourth time, developing
our technology and protecting national
identity in our products, while aiming
to reduce external dependence in the
defence industry. We added the Tulpar Turkey’s first tracked armoured vehicle,
to our product range in 2013. We have
also reached the final phase in design,
prototype and qualification process of
Turkey’s first national battle tank, the
Altay.
Other Information
40%
top 20
A record rate of revenue
growth
Patent applications
We attained a record 40% rate of revenue
growth in what was our 50th year of operation.
We were one of the top 20 companies
according to the number of patent applications
in Turkey.
Two main values
Esteemed shareholders,
Dividend Payments There are two main values behind
the success that Otokar has currently
reached.
We will endeavour to multiply our
successes with our strengths in 2014,
as we have in the past. With all the
developments - such as having the
largest product range of commercial
vehicles in the bus segment, launching
our new product in the light weight truck
segment, a further growth expected in
the logistics segment with the application
of new regulations, as well as new
innovations, we will record important
increases in market share. In the defence
industry, we will endeavour to launch new
products and ensure that these products
enjoy as much success as the current
products in 2014. We will continue our
work in order to bring the Altay main
battle tank to perfection and be ready to
best serve our country and the Turkish
Armed Forces.
(TL million)
I hope that 2014 brings prosperity to all
of our shareholders, customers, business
partners, and employees. I also hope to
close the year 2014 with another set of
successful results.
* Will be subject to approval at the Annual General
Meeting to be held in March 2014.
The first one is focusing on a niche
market… Otokar has defined new
markets, specialized on them and
listened carefully to its customers ever
since it was founded. The Company
has worked hard to meeting these niche
needs in the best manner. Accordingly,
Otokar was responsible for producing
Turkey’s first bus, armoured vehicle,
hazardous material transportation tanker
semi-trailer and a number of other firsts
during its 51 year history. By specializing
on different fields, the Company has
spread the risk and maintained its
sustainable growth.
Otokar’s second specialty is to stand
alone as an independent manufacturer.
As such, Otokar has recently started
to produce its own designed products
which carry millions of passengers
throughout the world. Besides, we
are proud to be Turkey’s number one
manufacturer of land systems and to be
designing Turkey’s national main battle
tank.
100
64
48
change
2012-2013
56%
2011
2012
2013*
Yours Respectfully,
Kudret Önen
Chairman
17
Introduction
Activities
Sustainability
Board of Directors
Kudret Önen
Chairman of the Board of
Directors
Halil İbrahim Ünver
Vice Chairman of the Board of
Directors
Osman Turgay Durak
Board Member
Ali Tarık Uzun
Board Member
Ahmet Serdar Görgüç
Board Member – General
Manager
Tuğrul Kudatgobilik
Board Member
İsmet Böcügöz
Independent Board Member
Abdulkadir Öncül
18
Other Information
Kudret Önen
Chairman of the Board of Directors
Ali Tarık Uzun
Board Member
İsmet Böcügöz
Born in Istanbul in 1953, Mr. Önen graduated from
the Department of Mechanical Engineering at Gazi
University. He joined Koç Group in 1975, working
at Ford Otosan. In 1980 he was appointed as the
R&D Manager at Koç Holding, and Assistant General
Manager at Otokar in 1984. Between 1994 and
2005 he served as the General Manager at Otokar.
After serving as the Co-President of the Other
Automotive Companies Group within the Koç Holding
organization in 2005, he served as the President
of the Defence Industry and Other Automotive
Companies Group of Koç Holding between 2006
and 2010. Since 2010, Mr. Önen has been serving
as the President of the Defence Industry, Other
Automotive and Information Technology Group within
Koç Holding.
Born in Mersin in 1964, Mr. Uzun graduated from
the Faculty of Political Science at the Department of
Economics in Ankara University; he later completed
a Master’s degree in Business Administration from
Koç University. Mr. Uzun began his professional
career in 1985 as an Account Specialist at the
Ministry of Finance. In 1992, he joined Koç Group as
an Assistant Coordinator of Financial Affairs within
the Audit and Finance Group. Mr. Uzun served as
Coordinator between 1996 and 2003, and has
been the President of the Audit Group within the
organization of Koç Holding since 2004.
Born in Burdur in 1943, Mr. Böcügöz graduated
from Istanbul University, Academy of Economics and
Commercial Sciences, at the Department of Business
Administration. He worked as a Bank Inspector
between 1968 and 1972, and joined Koç Group in
1972, working at the Finance Department of Tofaş.
He served as Chief Accountant and Accounting
Manager at Tofaş until 1995.
Pursuant to the CMB’s Principles of Corporate
Governance, Mr. Önen is an executive board
member, and is not qualified to serve as an
independent board member. While the positions he
has held over the past ten years are detailed above,
Mr. Önen currently serves on the Boards of several
Koç Holding companies.
Vice Chairman of the Board of Directors
Born in Istanbul in 1950, Mr. Ünver graduated from
Ulmer Technical College in Germany. Mr. Ünver is the
Chairman of Ünver Holding.
Governance, Mr. Ünver is a non-executive board
independent board member. While the position he
held over the past ten years is detailed above, Mr.
Ünver currently serves on the Board of Otokar.
Osman Turgay Durak
Board Member
Born in Istanbul in 1952, Mr. Durak received his
graduate and master degrees from Northwestern
University (USA), at the Department of Mechanical
Engineering. He joined Koç Group in 1976, working
as a product development engineer at Ford Otomotiv.
He served as Assistant General Manager in 1986,
Chief Deputy General Manager in 2000, and
General Manager at Ford Otosan in 2002. Between
2007 and 2009, Mr. Durak was the President of
the Automotive Group at Koç Holding. From May
2009, he served as Deputy Chief Executive at Koç
Holding, and was appointed CEO of Koç Holding in
April 2010, becoming a Board Member. Mr. Durak
was the Chairman of the Automotive Manufacturers
Association between 2004 and 2010.
Pursuant to the CMB’s Corporate Governance
Principles, Mr. Durak is a non-executive board
Mr. Önen currently serves on the Boards of several
Koç Holding companies.
Governance, Mr. Uzun is a non-executive board
held over the past ten years are detailed above, Mr.
Önen currently serves on the Boards of several Koç
Holding companies.
Board Member – General Manager
Born in Izmir in 1959, Mr. Görgüç graduated from the
Department of Mechanical Engineering at Boğaziçi
University; he later completed a Master’s degree in
Business Administration from Istanbul University.
Mr. Görgüç joined Koç Group in 1982, working at
the Group’s R&D Centre. He served as Automotive
Unit Manager at the R&D Centre until 1985, and
was appointed Advanced Projects Design Manager
at Otokar in the same year. Mr. Görgüç served
as Product Engineering Manager between 1989
and 1995, and as Assistant General Manager of
Engineering between 1995 and 2005. He has been in
the post of General Manager of Otokar since 2006.
Governance, Mr. Görgüç is an executive board
member, and is not qualified to serve as independent
board member. While the positions he held over
the past ten years are detailed above, Mr. Görgüç
currently works within Koç Group.
Board Member
Between 1995 and 2003, Mr. Böcügöz was the
Assistant General Manager in charge of Financial
Affairs at Otokar, subsequently retiring from this
position. Since 2012, he has been serving as an
Independent Board Member at Otokar Otomotiv ve
Savunma Sanayi A.Ş.
Governance, Mr. Böcügöz is a non- executive board
member, and holds the required qualifications to
serve as an independent board member. While the
positions he has held over the past ten years are
detailed above, Mr. Böcügöz resigned from these
duties after completing his term. Mr. Böcügöz has not
executed any transactions with either Koç Holding
A.Ş. or its affiliated parties at any time in the past five
years.
Abdulkadir Öncül
Born in Merzifon/Samsun in 1946, Mr. Öncül
graduated from the Faculty of Economics, at the
Department of Business Administration at Istanbul
University. He began his professional career in 1970
at Otosan Otomotiv, and later served as the Finance
Manager of Otokar between 1977 and 1984. Mr.
Öncül was a manager at Doğan Group between 1984
and 2001, subsequently retiring from this position.
Since 2012, he has been serving as an Independent
Board Member at Otokar Otomotiv ve Sanayi A.Ş.
Governance, Mr. Öncül is a non- executive board
member, and holds the required qualifications to
serve as an independent board member. He has not
executed any transactions with either Koç Holding
A.Ş. or its affiliated parties at any time in the past five
years.
Born in Istanbul in 1940, Mr. Kudatgobilik graduated
from the Faculty of Law at Istanbul University. He
completed a Master’s degree in Economics from
The London School of Economics. He began his
professional career in 1968 at Koç Group, and has
assumed several duties within the Group, mainly at
Arçelik, over the course of a 34 year career. He was
then elected as a Board Member of MESS (Turkish
Employers’ Association of Metal Industries). Mr.
Kudatgobilik has been serving as the Chairman of
MESS since April 2001. He is also the Chairman of
the MESS Education Foundation (MEV) and MESS
Entegre Geri Kazanım ve Enerji A.Ş. (MSG).
Governance, Mr. Kudatgobilik is a non-executive
board member, and is not qualified to serve as an
Mr. Kudatgobilik currently serves on the Board of
Otokar.
19
Introduction
Activities
Sustainability
Senior Management
General Manager
Hüseyin Odabaş
Assistant General Manager Finance
Hasan Basri Akgül
Assistant General Manager Domestic Market Sales and
Marketing
Ali Rıza Alptekin
Assistant General Manager Production and Procurement
Murat Ulutaş
Assistant General Manager Technical
Mustafa Bakırcı
Assistant General Manager Main Battle Tank and Armoured
Tactical Vehicles
20
Other Information
General Manager
Hasan Basri Akgül
Assistant General Manager - Domestic Market
Sales and Marketing
Murat Ulutaş
Assistant General Manager - Technical
Serdar Görgüç began his professional career in 1982
at the Koç Holding Automotive Unit as a Project
Engineer, and was later appointed to the position of
Unit Manager at the R&D Centre. In the same year,
he was appointed as the Advanced Projects Design
Manager, and served in that position until 1988. Mr.
Görgüç worked as the Product Engineering Manager
between 1989 and 1995, and as Deputy General
Manager of Engineering between 1995 and 2005. He
has been serving as the General Manager of Otokar
since 2006.
Mr. Görgüç graduated from Boğaziçi University,
Department of Mechanical Engineering in 1981;
he later received a master’s degree in Business
Administration from Istanbul University in 1983.
Hüseyin Odabaş
Assistant General Manager - Finance
Hüseyin Odabaş began his professional career at
Koç Holding in 1989 as a Management Trainee and
served as an Audit Expert between 1992 and 1994.
He then served as an Accounting Manager at Ormak
-a Koç Group Company- between 1994 and 1996
before working as an Accounting Manager at Otokar
between 1996 and 2003. He has been serving as
Assistant General Manager responsible for Finance
since 2003.
Mr. Odabaş graduated from the Department of
Business Administration at İstanbul University in
1985.
Hasan Basri Akgül began his professional career at
Tofaş in 1990 as a Regional Sales Assistant Manager
and went on to serve as Regional Sales Manager
between 1990 and 1992, Logistics Manager between
1993 and 1997, and Sales Coordinator in 1998. He
has been serving as Assistant General Manager at
Otokar responsible for Domestic Market Sales and
Marketing since 1998.
Mr. Akgül graduated from the Department of
Mechanical Engineering at Istanbul Technical
University in 1984; he later completed a Master’s
degree in the same discipline from the Boğaziçi
University in 1988.
Ali Rıza Alptekin
Assistant General Manager - Production and
Procurement
Ali Rıza Alptekin began his professional career at
Ford Otosan, a group company, in 1987 as a Product
Development Engineer where he served until 1989.
Mr. Alptekin then served as Quality Manager at
İstanbul Piston ve Pim Sanayi between 1991 and
1993, as a Production Management Manager at
Honda Turkey between 1993 and 2000, and as
Procurement Director of Manufacturing at Honda
UK between 2000 and 2006. He has been serving
as the Assistant General Manager responsible for
Production and Procurement at Otokar since 2006.
Mr. Alptekin graduated from the Department of
Mechanical Engineering at Boğaziçi University in
1989; he later completed a master’s degree in the
same discipline at the University of Clemson in 1991.
Murat Ulutaş began his professional career at Ford
Otosan in 1992 as Product Development Assistant
Manager and then served as Product Development
Manager between 2001 and 2004, and as the
Project Manager for the PUMA I5 Vehicle project from
2004 to 2005 at the same company. He has been
serving as an Assistant General Manager at Otokar
responsible for Engineering since 2006.
Mr. Ulutaş graduated from the Department of
Mechanical Engineering at Istanbul Technical
University in 1991; he later went on to complete a
Master’s degree in the same discipline, also from
Istanbul Technical University in 1993.
Mustafa Bakırcı
Assistant General Manager - Main Battle Tank
and Armoured Tactical Vehicles
Mustafa Bakırcı began his professional career in 1980
as an R&D Engineer at TÜBİTAK Defence Industry
Research and Development Institute before working
for Aselsan as an R&D Engineer from 1983 to 1985.
Starting his career at Otokar as a Project Engineer in
1985, he then went on to serve as the CAD Specialist
between 1987 and 1989, as CAD Chief between
1989 and 1995, as R&D Manager between 1995 and
2006 and as R&D Director from 2006 to 2008. He
has been serving as the Assistant General Manager
at Otokar responsible for the Main Battle Tank and
Armoured Tactical Vehicles since 2008.
Mr. Bakırcı graduated from the Department of
Mechanical Engineering at the Middle East Technical
University in 1979 before completing a master’s
degree in the same discipline, also from the Middle
East Technical University, in 1981.
21
Introduction
Activities
Sustainability
2013 Activities
Otokar celebrated its 50th year.
Otokar, which has been a symbol of the
Turkish automotive sector’s presence
and development, completed projects
which had influence not just in Turkey
but also in the world.
With 50 years of experience and
extensive knowledge, competence in
design and engineering and an effective
solution-creating approach, Otokar
continues to serve its customers.
22
Turkey’s first original tracked
armoured vehicle was developed.
Otokar added the Tulpar tracked
armoured vehicle, the intellectual
property rights of which belong to
Turkey, to its product range in 2013.
Otokar produced new tracked armoured
vehicle aimed first and foremost at the
Turkish Armed Forces, and secondly at
export markets. In addition, the COBRA
II - with its high safety and passenger
capacity, and the 4x4 tactical armoured
vehicle, URAL, are the other innovative
products to have been added to the
Company’s product range.
Other Information
The most popular company in the
bus market for the 4th time
Otokar succeeded in becoming the
most preferred bus brand in the market
for 25 seater or larger passenger buses
for the 4th time. In 2013 Turkish bus
market, three in every five small busses
and one in every sold two municipal
buses carry the Otokar brand. The
company maintained its endeavours
in developing new products, and
introduced Tempo buses.
Certificate of Design Approval
obtained from TSE (Turkish
Standards Institution).
Otokar registered USD 117 million
exports.
Otokar exports its products to more
than 60 countries over five continents.
The Company holds the intellectual
property rights of the products, proven
its success and become a world
brand. Registering USD 117 million
export revenues in 2013, Otokar aims
to increasing its exports in the coming
years.
With the ADR Certificate on the
transportation of hazardous materials,
Otokar became the first company
to obtain the Certificate of Design
Approval for its elliptic tanker trailers.
Production in the light vehicle
segment gets underway.
In line with its aim of broadening its
product range, Otokar started to
produce Atlas light truck.
40% growth in revenues
Otokar recorded revenues of TL 1.4
billion, marking 40% growth over the
2012 figure.
23
Introduction
Activities
Sustainability
Otokar small-size bus Tempo
High-comfort tourism transportation bus Doruk T
Public Transportation
In-city Passenger Transportation
Otokar manufactures vehicles for city
passenger transportation, tourism
and personnel transportation as sub
categories in the public transportation
segment.
Mass transportation has gained
prominence throughout the world due
to the problem of parking, increasing
environmental pollution and traffic jams,
especially big cities. Mass transportation
has therefore become a necessity to
meet cities’ needs due to the increase
in their populations. Thus, transport
operators and municipal corporations are
seeking mass transportation solutions
with minimum costs, which support the
economy, support social harmony and
promote urban development.
investment in this area has increased.
Otokar won the Istanbul Municipality’s
solo type bus tender and, in this scope,
produced 900 Otokar Kent buses in
2012, completing their delivery in 2013.
The contract also included after sales
services, the spare parts and 5 year
annual maintenance services.
Commercial Vehicles
Otokar is Turkey’s market
leader in passenger bus
segment.
Sales of vehicles in the city passenger
transportation segment expanded
by 67% in 2013 on the back of rising
demand in this category, and the market
for small size buses grew by 28%.
Otokar has recently been selected by
the Istanbul, Izmir, Samsun, Bursa,
and Malatya Municipalities to produce
vehicles for mass transportation, due to
their durability, low operation costs and
their environment-friendly characteristics.
In exports, Otokar extended its
operations into Europe while enhancing
its spare parts suppliers’ operations in
Europe and supported after sale services
in France, which is the Company’s
biggest export market.
The Company initiated sales of Vectio U,
Euro 6, Vectio C, and Navigo 8.4-meter
vehicles to European countries in 2013.
The Company realized its first Euro 6
vehicle fleet sale in 2013.
24
In the light of these facts, Otokar is
performing long-term and extensive
endeavours on environment-friendly
production based on high technology and
a focus on comfort.
Aware of the trend towards clean energy
and the use of alternative fuel in mass
transportation, Otokar produced Turkey’s
first electric bus, the Doruk (Vectio)
Electra. The electric bus was launched in
2012 in Turkey and undertook trial runs
for the IETT in Istanbul at the beginning of
2013, and the ESHOT in Izmir at the end
of 2013.
Otokar believes that mass transportation
vehicles should be designed in a
contemporary manner in line with the
modernization process in the cities,
an approach justified by the design
prizes awarded to Otokar for its Vectio
and Kent buses. Since modern mass
transportation has gained prominence,
Tourism and Personnel Transportation
Otokar has recently entered the tourism
sector, and realized production focusing
on meeting the needs of the sector.
Medium sized buses of 9-10 meters in
length are manufactured under the Vectio
brand and, while the 7-8 meters long
smaller buses manufactured under the
Navigo brand have become the most
popular buses over the last six years.
Otokar has gained considerable
popularity in the tourism sector by
producing bus models offering low cost,
high levels of comfort and extensive room
for baggage, and utilizes the opportunity
of buyers’ effective cost strategy.
Otokar launched small size Tempo
buses in the tourism and personnel
transportation segment during 2013.
The buses have gained significant
appreciation among customers in both
domestic and foreign markets because
of their design in line with the customers’
demand and expectations.
Other Information
Otokar
Atlas
New product launch
Otokar manufactured and introduced the
market its 8.5 tons Otokar Atlas truck and
extended its product range with light weight
truck segment in 2013.
Otokar Atlas light truck
Logistic Vehicles
Otokar has played a major role in the
cargo segment and participated in a
whole range of projects that add value
in the sector.
Semi-trailer
Otokar semi-trailer products, which
are designed in line with customers’
expectations, EU regulations and
customs legislation, have succeeded
in meeting key transportation needs
with their multi purposed area of usage.
With their special designs, state-ofthe-art technology and high level of
quality, Otokar vehicles provide a safe
transportation service.
Otokar was the first company to
implement ADR standards in Turkey
regarding the transportation of hazardous
materials and is the most experienced
manufacturer in this field.
Otokar conducted various projects to
manufacture tanker semi-trailer fleets
in Turkey and has gained considerable
experience in this area. The Company
is the one of the six counties in Europe
to hold the R111 certificate implying
reduced risk of the tankers overturning.
Moreover, Otokar was Turkey’s first
company to hold TSE Design Approval
Certificate regarding its elliptic tanker
trailer in line with the ADR code
implemented in Turkey.
Otokar has focused on restructuring in
the trailer market, in which the Company
enjoyed a commanding position and
extended its dealer channel. The
Company has also boosted its pioneering
position with its range of newly developed
and recently launched products.
Otokar’s vehicles added into its product
range in cargo segment in 2013:
• Maxi Sectioned Tanker - Semi-trailer
tanker, meeting ADR standards and
R111 instructions
• Mega Iceliner - Refrigerated semitrailer with high transportation capacity
• Semi-trailer suitable for railway
transportation
• Otokar realized its first Euro 6
vehicle fleet sale to European market
in 2013.
• 900 Kent model city bus
was delivered to the Istanbul
Metropolitan Municipality.
• Maxi Sectioned Tanker and Mega
Iceliner are added to semi-trailer
product range.
• Otokar Tempo model bus was
added to the product portfolio.
Light Truck
Otokar manufactured the 8.5 tons
Otokar Atlas light truck and released it
the market, and extended its product
range with light weight truck segment in
2013. Otokar Atlas stimulated the light
weight truck market with its high payload
capacity and low operating costs. With its
modular structure, the Otokar Atlas was
designed for multipurpose usage. Otokar
Atlas has received very positive feedback
since the vehicle entered the market, and
already received purchase orders for 200
of the vehicles.
Otokar Iceliner frigorific semi-trailer
25
Introduction
Activities
Sustainability
Defence Industry
Otokar is a pioneering
company in the sector
and commands the most
experience among the
companies manufacturing
land vehicles in the defence
sector.
Otokar Cobra II 4x4 tactical wheeled armoured vehicle
Otokar has the largest product range
in the defence industry, with its tactical
wheeled armoured vehicles tracked
armoured vehicles ranging from ¾
tonne to 60 tonnes, as well as turret
systems.
Tulpar
Tracked armoured vehicle
In 2013, Otokar designed Turkey’s first tracked
armoured vehicle called Tulpar. Tulpar is
named after the winged horse stated in Turkish
epics.
Otokar, which has been operating in the
defence industry with land systems since
1987, followed the developments and
the condition of the sector worldwide,
and played an active role in the success
of the sector. In addition to its capability
to compete with some of the world’s
biggest players in the sector, Otokar
enjoys effective competitive strength in
terms of quality, technology and services.
Otokar is a pioneering company in
the sector and commands the most
experience among the companies in
land defence sector. Otokar produced
Turkey’s first tactical vehicle in 1966,
first armoured vehicle in 1983, and first
tactical armoured vehicle in the 1990s,
and exported Turkey’s first tactical
armoured vehicle in 1993.
Otokar is the largest privately owned
industrial entity in the defence sector
with a range of vehicles from ¾ tons to
60 tons, with 4x4 and 8x8 vehicles, and
tracked armoured vehicles and turret
systems.
Tulpar tracked armoured vehicle
26
Otokar has set its main strategy as one
of developing, manufacturing, and selling
high tech products in both the domestic
and international markets. The Company
has structured its operations around this
strategy, building a pioneering position in
Turkey, and has been strengthening its
position in the world.
A strategy of placing priority on domestic
projects and domestic manufacturers
in the defence sector was continued in
Turkey during 2013.
In 2013, according to customers’ needs,
Otokar designed Turkey’s first tracked
armoured vehicle called Tulpar thanks to
its experience in land vehicles. In addition
to that, Otokar added Cobra II and Ural
tactical wheeled armoured vehicle to
its product range, and introduced three
different turret systems. Thus, Otokar has
reached a producer position of meeting
all types of customers’ needs regarding
wheeled and tracked land vehicles and
turret systems.
Other Information
Altay main battle tank winter tests
Otokar undertook development,
production and training activities for the
special operations vehicle used in North
America and tactical vehicles used in
the Far East, within the scope of the
Jaguar Land Rover projects in 2013.
It began to engineer and manufacture
Jaguar Land Rover military vehicles in the
scope of the Approved Vehicle Modifier
document. Sales operations of the spare
parts related to these systems will be also
performed by Otokar.
Altay National Main Battle Tank Project
Otokar released prototypes of Turkey’s
national main battle tank Altay at the end
of 2012. The Altay project comprises two
different phases; “Conceptual Design,
Detailed Design, Prototype Development
and Qualification Stage” and “serial
production”.
In May 2013, the second stage of the
project - the Detailed Design Stage - was
completed and the Company entered
the third stage - Prototype Development
and Qualification - of the Altay Project.
Endurance tests and ballistic tests were
undertaken during 2013. Production
of the PV1/PV2 prototypes is planned
to be initiated, and will be completed
and tested for System Qualification and
Approval Tests as part of the third stage
in 2014. The Phase-I of the Altay tank
project is scheduled to be completed in
2015.
Altay
National Main Battle Tank
The Phase-I of the Altay tank project is
scheduled to be completed in 2015.
The Altay project is expected to add
significant momentum to the Turkish
defence industry in the design,
development and manufacture through
its investments, qualified work force and
accumulated technical knowledge.
Altay, which was designed according
to the technical and tactical demands
of the Turkish Armed Forces, gained
prominence with its superior firepower,
high mobility and durability. When the
project is completed, all of design and
intellectual property rights will be held
by the Republic of Turkey without any
limitations.
The Altay tank was developed by
incorporating the world’s latest
technology, and is a tank which has the
most modern concept and design.
Otokar Ural 4x4 tactical wheeled armoured vehicle
27
Introduction
Activities
Sustainability
During its 50 years of operation, Otokar
has provided the Turkish automotive
sector with innovation and been a
pioneer for the sector in its corporate
history.
The Tulpar, Ural, Cobra II, Tempo, Euro
6 engine buses, Otokar Atlas, Maxi
sectioned tanker semi-trailer, Mega
Iceliner and trailer suitable for railway
transportation were launched to the
market as new products.
R&D Operations
Otokar has a modern R&D
centre which is structured
multi-dimensionally and
equipped with state-of-theart technology.
81
Domestic and national
identity
Otokar R&D centre owns 81 patents and
industrial designs.
The main factor behind its success has
been the R&D activity it has conducted in
line with international standards.
Otokar began its R&D activities in the
1970s, and has a modern R&D centre
which is structured multi-dimensionally
and equipped with state-of-the-art
technology.
In line with the Company’s vision, which
is “to protect the domestic and national
identity of its products”, Otokar’s R&D
centre has approximately 100 letter
patents, industrial designs and working
models.
Otokar has invested 4.2% of its total
revenues in R&D over the last five
years, and invested TL 50 million into
R&D in 2013. Otokar has meticulously
fulfilled the principle of utilizing resources
domestically with its R&D investments
over the last 10 years.
Climate controlled Test Chamber with Dynamometer
28
Otokar introduced Turkey’s first and the
world’s most modern Tank Test Centre in
2012, and realized most of the projects
including in its R&D operations. The
6DOF (6 Axised Simulator) was brought
into use in turret systems field in 2013.
In line with the ADR Certification in
hazardous materials transportation,
Otokar became the first company to
obtain the Certificate of Design Approval
for its elliptic tanker trailer.
Otokar Test Centre
• A climate controlled Test Chamber with
Dynamometer, the first of its kind and
unique in Turkey, which is also well
respected in Europe
• The highest capacity hydraulic road
simulator in Turkey
• Electromagnetic Compatibility Test
Chamber (EMC/EMI), the first of its
kind and unique in Turkey, and also the
most modern in the world
• One of the world’s most advanced and
modern ballistic laboratories and mine
testing equipment
Other Information
Productivity Operations
Improvement in the quality of
goods and services from the
suppliers and improvement
regarding quality problems
in the manufacturing
process was 65% and 50%,
respectively, during 2013.
Otokar semi-trailer suitable for railway transportation
Cobra with amphibic capabilities
Otokar sees productivity operations
as one of the major components for
sustainable growth.
main reasons for the challenges, held 64
meetings on these issues and created
solutions aimed at overcoming the
identified obstacles to realizing its goals.
A total of 76% of the projects were
focused on cost and quality, while 24%
concerned deadlines, the environment
and employee satisfaction.
Otokar develops and applies productivity
projects focusing on costs and
quality in its production, in line with its
business plan and goals. In addition,
the Company also develops projects on
employee satisfaction, environment and
occupational safety.
In the scope of productivity operations,
Otokar fulfilled 164 improvement projects
in 2013. The Company analysed the
164
Improvement projects
Otokar fulfilled 164 improvement projects in
2013 in the scope of productivity operations.
The Company realized a 65%
improvement in the quality of goods and
services from its suppliers and a 50%
improvement regarding quality problems
in the manufacturing process in 2013.
29
Introduction
Activities
Sustainability
An efficient after sale service is one
of the most significant components in
developing a new product, in addition
to customer satisfaction. In addition,
after sale services represent a source of
information for the company.
Otokar is improving on this issue day to
day, providing 24/7 customer accessibility
through “Otokar Customer Care” on
444 68 57/444 OTKR in Turkey. This
customer care aims to both increase
customer satisfaction to the highest level
and to obtain statistical data.
After Sales
Services
Otokar does not just provide
after sales services to the
domestic market, but also
to everywhere in the world
where the Company’s
vehicles are used.
444 68 57
Otokar Customer Care
Otokar endeavours to meet customers’ needs
and demands in as timely a way as possible.
30
With an awareness of the importance of
after sale services, Otokar endeavours
to meet customers’ needs and demands
in as timely a way as possible. The
Company does not just provide after
sales services to the domestic market,
but also to everywhere in the world where
Otokar’s vehicles are used.
In line with the increasing number of
vehicles and automotive products, Otokar
will maintain its policies on customer care
and customer satisfaction going forward.
Other Information
Toward the Future…
Otokar is placed in a leading
position to produce buses
suitable to transport disable
passengers.
In 2014, Otokar will strengthen
its position in defence sector and
commercial vehicles segment, and
focus especially on ensuring its
recently launched products are just as
successful as its earlier products.
Through the mandatory regulation to
provide passenger transportation for
the disabled, growth is expected due to
the renewal of vehicles in the city bus
segment. Otokar, which is the most
preferred brand in the bus segment in
Turkey, is placed in a leading position
to produce busses suitable to transport
disable passengers. In the tourism
transportation segment, the Vectio
T is expected to gain prominence as
an alternative solution, thanks to its
economical operating costs when
compared to coaches in a market
marked by rising operating costs. The
Tempo, a new product in personnel
transportation, is expected to fill a gap in
the sector with its low operating costs.
Otokar aims to export its products to
Europe and plans to be the largest bus
manufacturer in the small and medium
size buses in those countries with major
markets for buses.
Otokar foresees growth in the
tanker semi-trailer market with the
implementation of the ADR Certification,
and continues to serve the market
with a wide product range. In the
frigorific transportation segment, where
new regulations are expected to be
introduced, Otokar provides solutions
with its refrigerated semi-trailers and aims
to be a pioneer in this segment. In parallel
with recent trends in logistics, demand for
trailers suitable for railway transportation
is expected to grow.
With tonnage limitations, there is a move
among manufacturers of heavy goods
to vehicles with high payload capacities.
The Otokar Atlas will have one ton in
additional capacity when compared to
rivals in its class. Otokar aims to increase
the market share in the light truck
segment.
Otokar is aiming to approach to new
markets in 2014, while the company
continues to launch new products in the
defence industry, especially in export
markets. Production of new prototypes
for the Altay tank also continued.
2014
New markets
Otokar is aiming to approach to new markets
in 2014 in the defence industry.
• Otokar is the most preferred
brand with its buses suitable to
transportation for the disabled,
which became mandatory by
regulation.
• Otokar aims to increase the market
share in the light truck segment.
• The Company foresees growth in
tanker semi-trailer market.
• In the tourism transportation
segment, the Vectio T is expected
to gain prominence as an alternative
solution in Turkish market marked by
rising operating costs.
31
Introduction
Activities
Sustainability
Corporate Social Responsibility
As part of the activities for World
Environment Day on 5th June, the Ekokar
Environment Club gave talks to a total of
155 pupils from three different schools in
Arifiye and Sapanca.
Sustainability
Otokar pays great attention
to the trends of clean energy
and alternative fuels and
continues its operations in
line with these trends.
Award
The Cleanest Industry Plant
Otokar awarded “The Cleanest Industry Plant
of Turkey Award” by Ministry of Environment
and Urban Planning.
In addition to its successful operations,
Otokar continued to carry out social
responsibility projects, especially in the
field of education, during 2013.
As part of the “I am donating blood for
my country” project, Otokar supported an
additional blood donation campaign with
the Kızılay foundation. As a result, 164
units blood donation were realized.
In the scope of “I deny all disabilities for
my country”, the Company has given
training to its 1,477 employees about
appropriate approach to take when
dealing with disabled people.
The “Without Disabilities Sport Fest” was
organized at the Sakarya Atatürk Indoor
Sports Facility with the main sponsorship
of Otokar on 14th May, 2013. Through
this activity, a total of 2,000 children and
teenagers with disabilities from Sakarya,
Bolu, Düzce and Kocaeli participated in
the sports fest.
Several books and toys were donated
to the pupils of four primary schools in
Sakarya through the book and toy money
box campaigns.
A ventilator and a monitor were donated
to the intensive care unit of the Sakarya
Teaching and Research Hospital.
32
Through the “Vocational High School is
a National Issue”, 113 final year students
from vocational high schools were
provided with internship opportunities
in 2013-2014, as part of the efforts to
contribute to developing an educated
workforce.
Within the scope of the “Collaboration
between Iskur and the Industry”
program, vocational courses - 50%
of which have a job guarantee - were
organized for positions including inert-gas
welder, CNC operator, auto electronics
technician, automotive painter and main
manufacturing assembling worker. A total
of 121 people attended these courses.
The International Turk Telekom Young
Men’s Basketball Tournament was
organized under the leading sponsorship
of Otokar in Sakarya between 1st and 9th
February.
Environment
It is a generally accepted concept that
a producer is not only a seller, but an
actor which seeks the wellbeing of the
environment. The producer is expected
to manufacture environmentally friendly
products and also provide information on
the systems that are most suitable for the
operations of related products.
Other Information
• 1,477 employees are given
“Appropriate Approach to Disabled
People” training.
• In the environment prizes under the
category of “Large Scale Foundation
Environment Management and
Corporate Social Responsibility
Prizes” awarded by the Istanbul
Chamber of Industry (ISO) Otokar
won third prize.
• The total duration of training
provided to employees increased by
18%.
Turkey’s first electric bus
As one of the most active participants
in the automotive industry, Otokar
pays great attention to the trends of
clean energy and alternative fuels and
continues its operations in line with these
trends.
Otokar has been implementing the
relevant projects on alternative fuel
running buses since 2005. The Company
has proven how far it has come in the
field of R&D by producing Turkey’s first
hybrid bus, CNG medium size bus
and electric bus. With the vehicles it
produces, Otokar aims to provide a
cleaner environment, quieter traffic, lower
operational costs and higher efficiency.
Recently, important steps have been
taken to reduce exhaust emissions
in Turkey, in line with EU criteria. As
with other manufacturers, Otokar has
expended efforts in this issue. KENT
buses, with their environmentally friendly
EEV engines with Euro 5.5 emission
levels, are used in mass transportation,
especially in cities suffering from
environmental problems.
More efficient and cleaner energy usage
will be an important agenda item in the
following years. In the light of these
realities, Otokar is determined to continue
its production process which is both
contributive to economy and deterrent to
environmental pollution.
Otokar have gained recognition from a
number of foundations. Otokar won third
prize in the environment prizes under
the category of “Large Scale Foundation
Environment Management and Corporate
Social Responsibility Prizes” awarded
by the Istanbul Chamber of Industry
(ISO). The Company also won the “The
Cleanest Industrial Plant of Turkey” prize
awarded by the Ministry of Environment
and Urban Planning.
Human Resources
Otokar undertook a wide range of efforts
in its human resources approach and
training during 2013, as in previous years.
The total duration of training provided
increased by 18%, with a total of 2,591
employees receiving 38,351.4 hours of
training, amounting to an average of 14.8
hours per person.
187 blue-collar employees and 92
white-collar employees joined Otokar’s
workforce in 2013. 40 out of the 92
white-collar employees are employed
in R&D department as engineers. As a
result, the total number of people in R&D
Centre reached 488 by the end of 2013.
At Otokar, where a recommendation
system has been applying in
human resources, a total of 3,060
recommendations were provided
by employees during 2013, and 35
employees won different prizes as a result
of their recommendations.
As a consequence of the pre-assessment
carried out in 81 projects belonging to
Koç Group’s 20 companies, Otokar
became a finalist with five of its total 30
projects. The finalist projects are listed
below:
Collaboration Developers – White-Collar
Category: Collaboration between Otokar
and RMK Marine Defence Industry
Project Cooperation (with RMK Marine)
Customer Satisfaction Creators – BlueCollar Category: Indoor Trim Assembly
Improvement
Difference Makers – Blue-Collar
Category: Production of Special Vehicles
in Assembly Line
Creative Innovators – Blue-Collar
Category: Glass Despeckle
Adding value to life – Blue-Collar
Category: Prevention of Chemicals to
Diffuse into Environment and Recycling
As a result of the final committee
assessment, Otokar won the “2013 the
Most Successful Koç Group Company”
with the project of Creative Innovators –
Blue-Collar Category: Glass Despeckle”.
In the scope of collaboration between
universities and the industry, 22 students
from different universities were provided
with the opportunity of long-term
internships and 192 students conducted
their compulsory summer internship at
Otokar.
33
Introduction
Activities
34
Sustainability
Other Information
Otokar’s Corporate Governance Rating Note
increased from 8.68 in 2012 to 9.10 in 2013.
35
Introduction
Activities
Sustainability
Members of the Board of Directors and Committees
Board of Directors
Kudret Önen
Osman Turgay Durak
Ali Tarık Uzun
İsmet Böcügöz
Abdulkadir Öncül
Title
Chairman
Vice Chairman
Member
Member
Member
Member
Independent Member
Independent Member
Beginning
27.03.2013
27.03.2013
27.03.2013
27.03.2013
27.03.2013
27.03.2013
27.03.2013
27.03.2013
Ending
28.03.2014
28.03.2014
28.03.2014
28.03.2014
28.03.2014
28.03.2014
28.03.2014
28.03.2014
Executive Committee
Kudret Önen
Title
Chairman
Member
Beginning
25.05.2012
25.05.2012
Ending
28.03.2014
28.03.2014
Audit Committee
İsmet Böcügöz
Abdulkadir Öncül
Title
Chairman
Member
Beginning
26.04.2012
26.04.2012
Ending
28.03.2014
28.03.2014
Corporate Governance Committee
İsmet Böcügöz
Ali Tarık Uzun
Title
Chairman
Member
Beginning
25.05.2012
25.05.2012
Ending
28.03.2014
28.03.2014
Risk Management Committee
Abdulkadir Öncül
Kudret Önen
Title
Chairman
Member
Beginning
11.07.2012
11.07.2012
Ending
28.03.2014
28.03.2014
* During 2013, 12 meetings were held by Executive Committee, 8 meetings were held by Audit Committee, 6 meetings were held by Corporate Governance Committee,
and 7 meetings were held by Risk Management Committee. All committee members participated to the meetings.
* The Board of Directors met 14 times during 2013, with all members attending majority of these meetings.
* Clauses on the Board of Directors are determined in accordance with Articles of Association article 11, 12, and 13 and Turkish Commercial Code.
* Remunerations of Board of Directors and senior managers were brought into a written form and “Remuneration Policy” included in annual reports and the Company’s
corporate website (www.otokar.com.tr).
* Compensations to senior managers for 2013 included in note to financial reports numbered 27 belonging to 2013 financial year.
* Detailed information on committees and the operating principles of the committees are included in Corporate Governance Principles Compliance Report existing in annual
report and the Company’s corporate website (www.otokar.com.tr).
36
Other Information
CV’s of Nominees for the Board of Directors
Kudret Önen
See page 19, CV’s for the Board of Directors
Osman Turgay Durak
Ali Tarık Uzun
İsmet Böcügöz (Independent Member Nominee)
Abdulkadir Öncül (Independent Member Nominee)
Ahmet Nezih Olcay (Independent Member Nominee)
Born in 1947 in Beylerbeyi Istanbul, Mr. Olcay graduated from Istanbul Economics and Commercial Sciences Academy at the
Business Administration Department. He began his professional career at Tofaş Türk Otomobil Fabrikası A.Ş. in 1971 where he went
on to serve as an Accounting Service Manager, Accounting Manager, Financial Manager, Financial General Manager, Foreign Affairs
General Manager, Foreign Affairs Group Director, Finance and then as an Audit Group Director with A-Group First Degree signature
authorization. He retired from Tofaş Türk Otomobil Fabrikası A.Ş. in 2007 after having served continuously for 36 years.
He served as Member and Vice Chairman of the Board of Directors in various affiliates of Tofaş during his service at Tofaş Türk
Otomobil Fabrikası A.Ş.
Between 2008 and 2012, Mr. Olcay served as a General Coordinator, Vice Chairman and Chairman of the Board of Directors at
Plastiform Sanayi ve Ticaret A.Ş.
Pursuant to the CMB’s Corporate Governance Principles, Mr. Olcay is a non- executive board member, and possesses the required
qualifications to serve as an independent board member. He has not executed any transactions with either Koç Holding A.Ş. or its
affiliated parties over the past five years.
37
Introduction
Activities
Sustainability
Declarations of Independence of the Board of Directors Nominees
I was nominated to serve as “independent member” in Otokar Otomotiv ve Savunma San. A.Ş (the Company) in line with the
legislation, Articles of Association and Capital Markets Board’s Corporate Governance Communiqué. Within this context I declare that:
a) There has been no hiring relationship that includes important duties and responsibilities between the Company, companies that
the Company controls or has significant control over, legal entities that these companies control and myself, my spouse, in laws and
blood relatives up to second kin in the last 5 years; I also declare that I have not held more than 5% of the capital or voting rights or
preferential shares, either together or alone, and that I have not had any significant commercial relation.
b) I have not worked as a partner (holding 5% of the shares in the Company, or more) or as a manager who has important duties and
responsibilities, and I have not been a board member in companies which the Company obtains services or products from, or sells
service or products to, particularly auditing (including tax auditing, legal auditing, internal auditing), rating and consulting services,
during the transaction period within the framework of agreements in the last five years,
c) I have sufficient professional training, knowledge and experience to fulfil the duties on the grounds of my title as an independent
board member,
d) I will not work in state institutions or organizations on a full time basis, apart from in the capacity of an academic, pursuant with
legislation,
e) I am a resident in Turkey according to the Income Tax Code (G.V.K) dated 31/12/1960 and numbered 193,
f) I have sound ethical standards, a professional reputation and experience that allow me to contribute positively to the Company’s
operations, to maintain my neutrality in conflicts of interest between shareholders of the Company, to decide freely by taking into
account the rights of stakeholders,
g) I am able to devote time to the Company’s work to the extent that I may follow the operations of the Company’s activities and follow
the requirements of my mandate,
h) I have not served as a board member in the Company’s board for more than 6 years in the last 10 years,
i) I do not have responsibility in the capacity of an independent board member in more than three companies that are controlled by the
Company or its shareholders, or which control the Company, or in more than five listed companies in total,
j) On behalf of the legal entity as a board member, I am not registered or announced.
İsmet Böcügöz
38
Abdulkadir Öncül
Ahmet Nezih Olcay
Other Information
Remuneration Policy
Remuneration Policy for Members of the Board of Directors and Senior Management
This policy document identifies the remuneration system and practices concerning our Board Members and senior management who
hold administrative responsibility in line with CMB regulations.
A fixed remuneration is determined for all members of the board at the Annual General Meeting of the Company each year.
Additional payment is provided to executive members of the board in accordance with the policy established for the senior
management.
A bonus is determined by the Board of Directors to be paid to members of the Board who take part in committees formed by the
Board of Directors at the Company, in consultation with the Corporate Governance Committee by taking into account such committee
members’ contributions, attendance in the meetings, functions, etc.; the bonus is paid at the end of the year.
In respect of the remuneration of independent members of the Board of Directors, a payment plan based on the performance of the
Company may not be applied.
Pro rata payment is offered to members of the Board of Directors by taking into account the time they have allocated to their duty
between their date of appointment and their date of resignation. Expenses incurred by members of the Board of Directors on
account of providing contributions to the Company (such as transportation, telephone expenses, insurance, etc.) may be paid by the
Company.
The remuneration of senior management consists of two components; fixed and performance based payments.
The fixed salaries of senior management are determined in accordance with international standards and legal obligations by taking
into account the macroeconomic data in the market, the salary policies prevailing in the market, the size and long term targets of the
Company and the positions of the persons.
Bonuses for the senior management are calculated according to the bonus base, the performance of the Company and the individual
performance. A summary of the criteria is as follows:
• Bonus Base: Bonus bases are updated at the beginning of each year. They vary depending on the work volume of the positions of
the senior managers. When updating the bonus bases, the bonus policies for senior management applied in the market are taken
into account.
• Performance of the Company: The performance of the Company is determined at the end of the year by measuring the financial and
operational targets (market share, exports, international operations, productivity, etc.) assigned to the Company at the beginning of
each year. In setting out its targets, the Company ensures that the success is sustainable and incorporates improvements over the
previous years.
• Individual Performance: Targets related to employees, customers, processes, technology and long term strategy are taken into
account along with the targets of the Company in measuring an individual’s performance. In line with the performance of the
Company, the principle of achieving a long term sustainable improvement in areas besides financial areas is observed in measuring
individual performance.
In the event of any of our senior management’s resignation, a resignation premium may be paid by taking into consideration the term
of appointment, term of senior manager, provided contribution, last target premium before resignation date, salary in the final year and
premium information.
Total amounts as determined based on these principles and paid to members of the Board of Directors during the year are submitted
to the approval of the shareholders during the following Annual General Meeting.
39
Introduction
Activities
Sustainability
Independent Auditor Report on Annual Report
To the Board of Directors of
Otokar Otomotiv ve Savunma Sanayi Anonim Şirketi,
1. As part of our audit, we have assessed whether the financial information and the assessment and explanations of the Board of
Directors presented in the annual report of Otokar Otomotiv ve Savunma Sanayi Anonim Şirketi (“the Company”) prepared as of
December 31, 2013 are consistent with the audited financial statements as of the same date.
2. Management is responsible for the preparation of the annual report in accordance with “the Communiqué related to the
Determination of the Minimum Content of the Companies’ Annual Report”.
3. Our responsibility as independent auditors is to express an opinion on whether the financial information provided in the annual
report is consistent with the audited financial statements on which we have expressed our opinion dated February 14, 2014.
Our assessment is made in accordance with the principles and procedures for the preparation and issuing of annual reports in
accordance with Turkish Commercial Code No. 6102 (“TCC”). Those principles and procedures require that audit is planned and
performed to obtain reasonable assurance whether the financial information provided in the annual report are free from material
misstatement regarding the consistency of such information with the audited financial statements and the information obtained
during the audit.
We believe that the assessment we have made is sufficient and appropriate to provide a basis for our opinion.
4. In our opinion, the financial information and the assessment and explanations of the Board of Directors in the accompanying
annual report of Otokar Otomotiv ve Savunma Sanayi Anonim Şirketi are consistent with the audited financial statements as at
December 31, 2013.
Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi
A member firm of Ernst Young Global Limited
Ferzan Ülgen
Engagement Partner, SMMM
3 March 2014
Istanbul, Turkey
40
Other Information
Meeting Agenda
Agenda of Annual General Meeting of Otokar Otomotiv ve Savunma Sanayi A.Ş. dated 28th March 2014
1 Opening and election of the Chairing Board,
2 Reading, discussion and approval of 2013 Annual Report, which was prepared by the Company’s Board of Directors,
3 Reading of Summary of the Independent Audit Report for 2013 accounting period,
4 Reading, discussion and approval of the Financial Statements for the 2013 fiscal year,
5 Acquittal of each Board Member from their responsibilities regarding the activities of the Company in 2013,
6 Submitting the “Profit Distribution Policy” pertaining to 2013 and subsequent years pursuant to the regulations of the Capital
Market Board for approval,
7 Distribution of 2013 profit and approval, approval after changes, or disapproval of the Board of Directors’ proposal regarding the
date of profit distribution,
8 Determining the number and office terms of the members of the Board of Directors, electing the members in number so
determined, electing the independent members of the Board of Directors,
9 Informing the Shareholders of and approval of The “Remuneration Policy”, and the payments made to the Board Members and
Senior Managers, pursuant to the Principles of Corporate Governance,
10 Determining the monthly gross salaries of Board Members,
11 Approval of the Independent Audit Firm selected by the Board of Directors, pursuant to the provisions of the Turkish Commercial
Code and the Capital Markets Board,
12 Informing Shareholders about the transactions conducted with related parties during 2013, within the scope of Capital Market
Board regulations,
13 Informing the Shareholders of donations provided in 2013 and determining the upper limit of donations to be made in 2014,
14 In accordance with Capital Market Board regulations, informing the Shareholders of any collaterals, guarantees, mortgages and
indemnifications given to third parties by the Company and the affiliates and income or benefits related to these,
15 Granting permission to Shareholders who hold control over the management, to Board Members who hold shares of the
Company, to senior managers, and their spouses, in-laws and blood relatives up to third kin, as pursuant to the Articles 395 and
396 of the Turkish Commercial Code and CMB regulations; and informing the Shareholders about such transactions executed
during 2013 within the scope of Capital Market Board Corporate Governance Principles Communiqué,
16 Wishes and opinions.
41
Introduction
Activities
Sustainability
Board of Directors Report
Board of Directors Report of Otokar Otomotiv ve Savunma Sanayi A.Ş. for the Period 01.01.2013-31.12.2013
Dear Shareholders,
Our Company presents to the Annual General Meeting and the public its non-consolidated financial reports regarding its activities
in 2013, and prepared in accordance with Turkish Accounting Standards/Turkish Financial Reporting Standards which were put
into practice by Public Oversight Accounting and Auditing Standards Authority (KGK) pursuant to Capital Market Board’s (CMB)
“Communiqué on the Principles of Financial Reporting in Capital Markets”, numbered II-14.1. Appendices and comments related to
these standards were also considered in preparing financial tables.
The names, office terms and authority limits of the members who undertook duty at the Boards of Directors during the period are as
follows (determined at the Annual General Meeting of Shareholders dated 27th March, 2013).
Board of Directors
Kudret Önen
Osman Turgay Durak
Ali Tarık Uzun
İsmet Böcügöz
Abdulkadir Öncül
Title
Chairman
Vice Chairman
Member
Member
Member
Member
Independent Member
Independent Member
Beginning
27.03.2013
27.03.2013
27.03.2013
27.03.2013
27.03.2013
27.03.2013
27.03.2013
27.03.2013
Ending
28.03.2014
28.03.2014
28.03.2014
28.03.2014
28.03.2014
28.03.2014
28.03.2014
28.03.2014
Authority limits of the Chairman and Board Members have been determined in accordance with Article 12 of the Company’s Articles of
Association, and the provisions of the Turkish Commercial Code.
Capital and Ownership Structures
As of December 31, 2013, the registered capital ceiling had been increased to TL 100 million. The issued capital stands at TL 24
million.
Shareholders who hold more than 10% of the capital, the number of shares they hold and the percentage of these shares in the
capital are as follows:
Shareholders
Koç Holding A.Ş.
Ünver Holding A.Ş.
Diğer Ortaklar
Toplam
Amount of Shares (TL)
10,722,750
5,954,944
7,322,306
24,000,000
Stake (%)
44.68
24.81
30.51
100.00
The remaining shares, at a par value of TL 7,322,306 representing 30.51% of our Company’s capital, consist of listed shares and
shares held by other shareholders.
Our Company has an affiliated company, “Otokar Europe SAS”, which was established in France on 18th August, 2011 to organize
export activities and increase exports. The company has 100% of its issued capital which is amounting to €100,000 (TL 293,650).
Amendments to the Articles of Association
Amendments made to the Articles of Association at the Annual General Meeting on 27th March, 2013 were as follows:
In order to comply with the provisions of the Turkish Commercial Code and Capital Market Board regulations, following articles of the
Company’s Articles of Association were amended: Article 3: Trade Name, Article 4: Objective and Subject, Article 5: Head Office and
Branch Offices of the Company, Article 7: Registered Capital, Article 8: Increasing Registered Capital, Article 9:Issue of Bonds and
Other Securities, Article 10: Board of Directors, Article 11: Board of Directors Meetings, Article 12: Authority of Board of Directors,
Article 13: Binding the Company, Article 14: Other Provisions Related to Board of Directors, Article 15: Auditors, Article 16: Duties
and Responsibilities of the Auditors, Article 17: General Meetings, Article 18: Number of Votes, Article 19: Quorum, Article 20: Voting
Methods, Article 21: Submitting to the Ministry and Commissioner, Article 22: Accounting Period
42
Other Information
The following articles were annulled: The article entitled “Provisional Article”, Article 23: Annual Reports, Article 24: Distribution of
Profit, Article 25: Reserves, Article 26: Cancellation, article 27: Rescission and Dissolution, Article 28: Announcements, Article 29:
Submitting Articles of Association to the Ministry and Capital Market Board, Article 30: Amendments to the Articles of Association,
Article 31: Legal Provisions, Article 32: Compliance with the Principles Corporate Governance.
Dividends Distributed in the Last Three Years and Their Percentages
Over the last three years, Otokar distributed cash dividends at the below percentages of the issued capital.
Period
2010
2011
2012
%
62.50
200.00
266.67
The entire dividend pertaining to the 2012 accounting period was paid to our shareholders in cash, starting from 3rd April, 2013.
Our shareholders may access the corporate and financial data of our Company at www.otokar.com.tr under the section “Investor
Relations”.
The Automotive Sector and Otokar
Otokar operates in the commercial vehicles segment of the automotive industry. Otokar’s product range consists of minibuses,
medium size buses and buses, which target the commercial market and are used in public transportation and personnel
transportation, as well as 4x4 tactical vehicles and wheeled armoured vehicles, which are used in defence industry services.
Additionally, the Company manufactures trailers and semi-trailers under the brand name Otokar-Fruehauf, panel trucks under the
brand name Otokar Atlas for the transportation and logistics industry.
On 29th July, 2008, Otokar signed an agreement with the Undersecretariat for Defence Industries to carry out Phase I: Design and
Prototype Development of Turkey’s first Main Battle Tank, as part of the project of “Manufacturing a National Main Battle Tank” (namely,
Project Altay). Having finalized the concept design in 2010, Otokar is currently working on the detailed design stage. A full-scale model
of the ALTAY tank was exhibited to the public at IDEF 2011 in May. Additionally, Otokar opened Turkey’s first and only tank testing
centre in March 2012. In November 2012, a prototype of the Altay tank was tested and displayed in a special ceremony.
In 2013, the project’s concept design and detailed design stages were completed. The Company then advanced to the third stage “Prototype manufacturing and Qualification”.
The Market - Sales - Production
The developments observed in the sector during 2013 can be summarized as follows, based on the data obtained from the OSD
(Automotive Manufacturers Association):
Total production of motor vehicles increased by 5% YoY to 1,126,000 vehicles between January-December 2013. The production of
cars also grew by 10% YoY to 633,000, while the total market for motor vehicles grew by 9% YoY in 2013.
Developments in production for each vehicle segment in 2013 were as follows:
• In the light commercial vehicle segment;
29% increase in minibuses,
25% increase in midi-buses,
4% decrease in pickups was recorded.
• In the heavy commercial vehicles segment;
30% increase in buses,
3% decrease in large size trucks,
57% increase in small size trucks were recorded
When compared to 2012, total sales of imported light commercial vehicles dropped by 2%, and sales of locally manufactured light
commercial vehicles dropped by 24% in 2013. The market share of imported vehicles stood at 48% in 2013.
43
Introduction
Activities
Sustainability
Production and Sales
Our Company’s production and sales figures by product type are presented below, and in comparison with the figures of the previous
year:
Minibus
Small size bus
Bus
4x4 Tactical
Vehicles
Armoured
Tactical Vehicles
Trailers
Trucks
Total
2013
Production
Sales
40
49
2,659
2,743
1,224
1,251
2012
Production
Sales
52
56
1,812
1,877
616
637
Change (units)
Production
Sales
(12)
(7)
847
866
608
614
Change (%)
Production
Sales
(23)
(13)
47
46
99
96
127
127
23
31
104
96
452
310
428
404
346
347
82
57
24
16
769
362
5,609
768
212
5,554
1,191
4,040
1,190
4,138
(422)
362
1,569
(422)
212
1,416
(35)
39
(35)
34
According to our non-consolidated financial statements that were prepared according to the related regulations, the Company’s 2013
revenue grew by 40%.
The distribution of our turnover in terms of domestic and international sales, and in comparison with the previous year, is as follows:
2013 (TL)
1,175,900,196
225,652,738
1,401,552,934
Domestic Sales
International Sales
Total
2012 (TL)
744,330,923
260,161,309
1,004,492,232
Change (%)
58
(13)
40
Our total international sales totalled USD 117,458,384 in 2013 (2012: USD 145,785,646), with a 16% share (2012: 26%) in total
turnover was 16%.
Our total capacity utilization in 2013 was 51% (2012: 37%).
Otokar owes its growth to its proprietary products, of which the design and intellectual rights belong to the Company, and which are
developed by the Company’s own engineering, research, and development resources. Otokar has adopted a strategy to expand in the
Defence Industry, increase the share of its exports in its total turnover and to expand its portfolio with new models. The Company has
been successfully attaining these targets.
Investments
In 2013 Otokar continued its investments in the “Otokar R&D Centre”, which has been initiated in the previous years, by taking
a crucial decision in the area of research and development with a view to achieving its rapid growth target with vehicles of which
intellectual rights are owned by Otokar.
Total investments had amounted to approximately USD 8 million at the end of 2013.
Administrative Activities
The names and positions of the senior managers of our Company in 2013 were as follows:
Name-Last Name
Ahmet Serdar GÖRGÜÇ
Hüseyin ODABAŞ
Ali Rıza ALPTEKİN
Murat ULUTAŞ
Hasan Basri AKGÜL
Mustafa BAKIRCI
44
Position
General Manager
Assistant General Manager - Finance
Assistant General Manager - Production and Supply
Assistant General Manager - Technical
Assistant General Manager - Sales and Marketing
Assistant General Manager - Main Battle Tank and Armoured Tactical Vehicles
Other Information
As of 31st December, 2013 our Company had a total of 2,264 employees (2012: 2,281). Of these employees, 640 (2012: 595) were
administrative and office personnel and 1,624 (2012: 1,686) were factory workers. There were no incidents of disputes or labour
movements during the period.
Our Company is subject to the Collective Labour Agreement signed between the Turkish Metal Workers Union and MESS (Turkish
Employers’ Association of Metal Industries) on 3rd June, 2013, and which was in effect as of 1st September, 2012.
Our Company has agreed to comply with the Principles of Corporate Governance issued by the Capital Markets Board, and to
undertake the necessary amendments in line with changing conditions. Otokar has been rated by SAHA Kurumsal Yönetim ve Kredi
Derecelendirme Hizmetleri A.Ş. in accordance with CMB’s (Capital Markets Board) Communiqué on “The Principles Regarding Rating
Activity in Capital Markets and Rating Agencies”, and as per rating the compliance of corporations listed on the BIST (previously the
ISE - Istanbul Stock Exchange), with the Principles of Corporate Governance. The “Corporate Governance Rating Report” is available
on www.otokar.com.tr
Our Company’s Corporate Governance Rating, increased from 86.80 (8.68) in 2012 to 91.03 (9.1) in 2013. In accordance with
decisions taken during the Capital Market Board’s meeting dated 1st February, 2013 and numbered 4/105, our rating was revised from
91.03 (9.10) were revised to 86.44 (8.64) on 3rd March, 2014.
Financial Results
Our Company presents its 2013 non-consolidated financial statements to the Annual General Meeting and the public. The financial
statements were prepared in accordance with Turkish Accounting Standards/Turkish Financial Reporting Standards which were put
into practice by Public Oversight Accounting and Auditing Standards Authority (KGK) pursuant to Capital Market Board’s (CMB)
“Communiqué on the Principles Financial Reporting in Capital Markets”, numbered II-14.1. Appendices and comments related to
these standards were also considered in preparing financial tables.
The financial statements, footnotes and ratios showing the results of our activities in 2012 are also submitted for your attention.
Our Company recorded TL 1,401,552,934 of revenue in 2012, and a gross profit of TL 315,010,875.
According to the financial statements prepared in accordance with Turkish Financial Reporting Standards, and as pursuant to CMB’s
regulations, our Company set aside a depreciation provision of TL 40,447,945, and a severance pay and guarantee provision of TL
9,877,742 in 2013, closing the year with a pre-tax profit of TL 108,248,320, and a net profit of TL 96,561,743 after tax.
Our Company will pay TL 43,676,005 in taxes for the year 2013, and its total tax expense, which includes deferred tax expenses and
amounts to TL 11,686,577, is shown in the financial statements. Our Company’s net profit after tax stood at TL 96,561,743.
In our Annual General Meeting dated 27th March, 2013, the upper limit of donations that will be made in 2013 was set as TL
2,100,000. In 2013 our Company provided tax-deductible donations and aid amounting to TL 2,038,442, to foundations and
associations for charitable purposes.
A balanced and consistent policy is followed in distributing profit among shareholders and the Company’s benefits in accordance with
the Principles of Corporate Governance. In determining profit distribution, our Company takes into account its long term strategy,
capital requirements, investments and financing policies, and profitability and cash position.
We submit to your approval;
• the payment of gross=net cash dividend at the rate of 416.667% and in the amount of TL 4.16667 per share at par value of TL
1.00, to shareholders in unlimited taxpayer status and to shareholders in limited taxpayer status, who earn profit share through a
business unit or a permanent representative in Turkey;
• the payment of net cash dividend at the rate of 354.167 %, and in the amount of TL 3.54167 per share at par value of TL 1.00, to
other shareholders, as per the Profit Distribution Proposal attached herein;
• and that the beginning date of payment of the dividends amounting to TL 100,000,000 to be April 4, 2014, Friday. We have
presented to you the summary of the activities and the results obtained in 2013.
Dear Shareholders,
Our Board of Directors completed its office term today. The new members of the Board of Directors will be elected at this meeting. We
are grateful for your trust, courtesy, and assistance throughout our office term
Istanbul, March 3, 2014
Kudret Önen
Chairman
45
Introduction
Activities
Sustainability
Profit Distribution Policy
Otokar Otomotiv ve Savunma San. A.Ş. Profit Distribution Policy
Our Company distributes its profit in accordance with the provisions of the Turkish Commercial Code, the Capital Markets Law, the
Tax Law and other applicable regulations as well as the relevant articles of our Company’s Articles of Association. A balanced and
consistent policy is followed in the distribution of profit among shareholders and the Company’s beneficiaries in accordance with the
Principles of Corporate Governance.
In principle, by considering market expectations, our long term company strategy, investment and finance policies, profitability
and cash position, a minimum 50% of the distributable profit for the period which is calculated in accordance with Capital Market
Legislation is distributed in cash or as bonus shares, as long as related regulations and financial position allow.
Profit distribution is planned to be carried out within one month, at most, following the Annual General Meeting. The date for the profit
distribution is set in the Annual General Meeting. If authorized, the Annual General Meeting or the Board of Directors may decide to
distribute profit in instalments in accordance with Capital Market Legislation.
According to the Company’s Articles of Association, the Board of Directors may distribute profit advances as long as it is authorized in
the Annual General Meeting and complies with Capital Market Regulations.
46
Other Information
Profit Distribution Proposal
Profit Distribution Proposal for the Accounting Period 01.01.2013-31.12.2013
According to our non-consolidated financial statements pertaining to the 01.01.2013-31.12.2013 accounting period, which were
prepared in accordance with Turkish Accounting Standards/Turkish Financial Reporting Standards which were put into practice by
Public Oversight Accounting and Auditing Standards Authority (KGK) pursuant to Capital Market Board’s (CMB) “Communiqué on the
Principles Financial Reporting in Capital Markets”, numbered II-14.1 and the appendices and comments related to these standards,
and which were audited by Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş., a “Non-Consolidated Net Profit” of
TL 96,561,743 was recorded. Our profit distribution proposal, which was prepared by taking into account our long term strategy, the
capital requirements of our Company, investments and financing policies, and profitability and cash position, is presented below. In line
with the resolution reached at the Annual General Meeting, the dividend payment will start on 4th April, 2014.
Otokar Otomotiv ve Savunma Sanayi A.Ş. Profit Distribution Statement 2013 (TL)
1. Paid-in/Issued Capital
2. Total Statutory Reserves (based on Statutory Records)
Information concerning any privileges provided in the articles of association
regarding profit distribution
According to CMB
3
4
5
6
7
8
9
10
Profit for the Period
Taxes Payable (-)
Net Profit for the Period (=)
Losses in Previous Years (-)
Primary Statutory Reserve (-)
NET DISTRIBUTABLE PROFIT FOR THE PERIOD (=)
Donations made during the year (+)
Net distributable profit for the period plus donations, on
which the primary dividend is calculated
11 Primary Dividend to Shareholders
- Cash
- Bonus Shares
- Total
12 Dividend Paid to Holders of Preferred Shares
13 Other Dividend Paid
- to Board Members
- to employees
- to parties other than stakeholders
14 Dividend Paid to Holders of Dividend Right Certificate
15 Interim Dividend to Shareholders
16 Secondary Statutory Reserve
17 Statutory Reserves
18 Special Reserves
19 EXTRAORDINARY RESERVES
20. Other Funds Proposed to be Distributed
21. Secondary Statutory Reserve Allocated from Other
Funds Proposed to be Distributed
108,248,320
11,686,577
96,561,743
24,000,000
29,078,147
According to Statutory
Records
244,495,080
43,581,319
200,913,761
96,561,743
2,038,442
98,600,185
200,913,761
1,200,000
49,300,093
38,592,401
8,669,249
98,800,000
9,880,000
12,107,506
91,033,761
-
1,210,751
-
Dividend Ratio Table
Group
Gross
Net
A
B
Total
A
B
Total
Total Dividend Distributed
Total Dividend Distributed/Net
(TL)
Distributable Profit for the Period
Cash (TL)
Bonus (TL)
Ratio (%)
100,000,000
0
104
Dividend Per Share at Par Value of
1 TL
Amount (TL)
Ratio (%)
4.16667
416.667
100,000,000
85,000,000
0
0
104
88
4.16667
3.54167
416.667
354.167
85,000,000
0
88
3.54167
354.167
47
Introduction
Activities
Sustainability
Legal Disclosures
Report Period: 01.01.2013-31.12.2013
Company Title: Otokar Otomotiv ve Savunma Sanayi. A.Ş.
Trade Registry / Number: İstanbul/83467
Ownership Structure and Capital Distribution:
Registered Capital Ceiling: TL 100,000,000
Paid-in Capital: TL 24,000,000
Shareholders
Koç Holding A.Ş.
Other subsidiaries
Total
Share amount (TL)
10,722,750
5,954,944
7,322,306
24,000,000
Percentage (%)
44.68
24.81
30.51
100.00
Contact Address: Aydınevler Mah. Dumlupınar Cad. No: 58 A Blok 34854 Küçükyalı/İstanbul
Factory Address: Atatürk Cad. No: 6 54580 Arifiye/Sakarya
Phone: +90 216 489 29 50
Website: www.otokar.com.tr
Preferential Shares and Voting Rights of Shares:
There are no privileges in the Company’s Articles of Association pertaining to the exercise of voting rights.
Organizational Changes within the Year:
There were no significant organizational changes within the year.
Legal Action Taken Against the Company:
There was no important legal action taken against the company.
Legislative Changes that Could Affect the Company’s Activities Significantly:
There were no legislation changes that could affect the company’s activities significantly.
Conflict of Interests with Corporations which the Company Obtains Services from in Investment Consultancy, Rating and
such Subjects, and the Measures Taken to Prevent such Conflicts of Interest:
The Company does not obtain any investment consultancy services. A Corporate Governance Rating service was received, but there
was no conflict of interest with the company providing this service.
Private and Public Audits in 2013:
None.
Administrative and Legal Sanctions Applied against the Company or its Board Members due to Non-compliance with
Regulations:
None.
Implementations of Resolutions of the Annual General Meeting:
The resolutions reached at the Annual General Meeting, dated 27th March, 2013, have been implemented.
Extraordinary General Meetings Held During the Year:
None.
Information on the permission granted to shareholders who have control over the management, to Board Members who
hold shares in the Company, to senior managers, and their spouses, in-laws and blood relatives up to second kin, to
conduct transactions or compete with the Company and its affiliates which could lead to conflicts of interest:
None.
48
Other Information
Corporate Governance Principles Compliance Report
1. STATEMENT OF COMPLIANCE WITH THE PRINCIPLES OF CORPORATE GOVERNANCE
The said principles, which bring about the quality of corporate governance, have been adopted by our Company, and most of them
are still implemented. The Company adheres to Corporate Governance Principles in issuing public disclosures, ensuring transparency,
and carrying out the necessary work with respect to all decisions and transactions concerning the shareholders, stakeholders and the
Board of Directors.
While the Company fully complies with the mandatory principles set out in “Communiqué on the Determination and Implementation
of Corporate Governance Principles” Serial: IV, No: 56 in 2013, it also complies with the majority of optional principles. The Company
aims to comply with all optional Corporate Governance Principles; however, full compliance has not yet been achieved due to a
number of difficulties experienced during the implementation of certain principles, due to ongoing debates concerning compliance
with certain principles on the international platform as well as in Turkey, and also as a result of the inapplicability of some principles
due to the structure of the Company and the market. The Company is currently working to comply with the principles that have not
yet been implemented, and aims for full compliance after completing the necessary administrative, legal, and technical infrastructure in
a manner that will contribute to the efficient management of the Company. Details of the extensive work carried out by the Company
within the framework of the Principles of Corporate Governance, the principles which have not yet been implemented and any
conflicts of interest stemming from such incompliance are set out below.
The Company’s main efforts concerning Corporate Governance in 2013 consisted of compliance with Capital Markets Code which
includes the CMB’s new regulations on corporate governance principles and compliance with the new Turkish Commercial Code.
In the 2013 Annual General Meeting, all amendments put forward by these regulations were included in the Company’s Articles of
Association. Additionally, the process of determining independent board members, announcing them to the public and the election
was completed in accordance with the regulations. It is sufficient for our Company, which is among the 3rd group corporations in
2013, to operate with two independent board members. The Committees established within the Board of Directors have effectively
continued their duties. The remuneration policy regarding the Board of Directors and senior managers was determined and presented
to shareholders at the Annual General Meeting. The Annual General Meeting information document, which consists of preferred
shares, voting rights, organizational changes; as well as the CV’s of candidates for the Board of Directors, the remuneration policy
regarding the Board of Directors and senior managers and the reports and the information concerning related party transactions, were
shared with our investors 3 weeks prior to the Annual General Meeting. Additionally, the Company’s corporate website and annual
report were reviewed and the necessary revisions were carried out in order to ensure full compliance with the Principles.
In order to achieve full compliance, the developments in the legislation and relevant implementations will be taken into consideration,
and necessary steps will be pursued in the coming period as well.
The COMPLIANCE REPORT is presented below for your attention, and is also accessible on the Company’s website
[www.otokar.com.tr].
SECTION I - SHAREHOLDERS
2. Shareholder Relations Unit
At Otokar Otomotiv ve Savunma Sanayi A.Ş., the Shareholder Relations Unit is responsible for conducting relations with the
shareholders following the cooperation between related units. The Unit is responsible for providing information to the shareholders
and prospective investors, while not disclosing any confidential information or trade secrets, and without causing any inequality of
information while ensuring a two-way dialogue between the Company’s management and the shareholders. Its main activities include:
• Promoting the Company to individual and institutional investors in Turkey and abroad, providing information to potential investors
and shareholders, and meeting the information needs of analysts and specialists working in these institutions,
• Answering questions and meeting the needs of the shareholders,
• Informing shareholders and potential investors of macro and micro developments through investor meetings,
• Providing the most accurate, swiftest and complete information by regularly updating the website, annual report, investor
presentations investor bulletins and such means of communication,
• Carrying out all kinds of public disclosure activities as required by the regulations, such as financial reporting and disclosing of
special situations to the public, and also other functions related to public disclosure within the scope of the Company’s disclosure
policy,
• Ensuring that the Annual General Meeting is held in accordance with applicable regulations, articles of association, and other internal
regulations,
• Recording voting results and informing shareholders of the reports which contain voting results through the minutes of the Annual
General Meeting,
49
Introduction
Activities
Sustainability
• Preparing documents which may be used by shareholders, and publishing such documentation on the Company’s website three
weeks prior to the Annual General Meeting,
• Ensuring that dividends are paid to the shareholders,
• Providing a two way flow of information by playing the role of a interlocutor between shareholders and the Company’s senior
management,
• Monitoring any amendments to the legislation and laws, and ensuring that they are implemented by the Company,
Hüseyin Odabaş and İrfan Özcan are authorized to carry out such duties, and information can be obtained via e-mail at arf@otokar.
com.tr, or by calling (+90264) 229 22 44 (extension: 6200).
A total of 20 one-to-one meetings were organized with Analysts from Intermediaries by the Relations with Shareholders Unit.
3. Exercise of Shareholders’ Rights to be Informed
Shareholders were informed of financial and administrative matters in the last Annual General Meeting.
The Company does not carry out any discrimination among shareholders in terms of accessing and inspecting information; and all
information, excluding trade secrets, is shared by the shareholders. The Investor Relations Unit replies to all questions, while not
disclosing confidential information and trade secrets, by phone or in writing, after consulting with the most informed persons in
the Company about the matter. As stated in section 9 of this report, all kinds of information and explanations, which might affect
shareholder rights, are available on the Company’s website.
The appointment of a Special Auditor has not as yet been stipulated as an individual right in the Articles of Association; however,
pursuant to Article 438 of the Turkish Commercial Code, each shareholder may demand in the Annual General Meeting that certain
events be clarified by conducting a special audit, even if it is not on the agenda, whenever it is required to exercise shareholder rights
and if the right to be informed and inspect has been exercised previously. No such demand has been received from the shareholders
so far. Additionally, the Company’s activities are periodically audited by an Independent Auditor and Internal Audit Unit in the Koc
Holding Audit Group Unit.
The Company attaches importance to compliance with legislation in satisfying investors’ demands. There were no complaints
or administrative or legal pursuance on exercising shareholders’ rights last year. In this period, no applications or questions were
submitted to the unit on this subject.
4. Information Concerning the Annual General Meeting
One Annual General Meeting was held in 2013. The Annual General Meeting was held on 27th March, 2013 with the quorum of 76%.
No agenda item was delivered by shareholders for the meeting.
The Annual General Meeting was organized in a manner which enables broad participation and allows shareholders to be well
informed within the scope of the principles set out in the procedure of Koc Group Companies’ Annual General Meetings, which
was prepared by taking the Turkish Commercial Code, the Capital Markets Legislation and Principles of Corporate Governance into
account. Electronic participation was also provided as well as physical participation. Moreover, the opportunity to participate in the
Annual General Meeting was provided to representatives of written and visual media, officers of several intermediaries and individuals
wishing to participate as observers.
The Board of Directors issues invitations to the Annual General Meeting in accordance with the provisions of the Turkish Commercial
Code, the Capital Market Law and the Company’s Articles of Association. Once the Board of Directors reaches the decision to
convene the Annual General Meeting, the public is informed through the necessary announcements via the Public Disclosure Platform
(KAP), the MKK’s e-management and its e-company portal, the Electronic General Meeting System (EGKS) and the Company’s
corporate website.
Additionally, the location and the agenda of the Annual General Meeting, any draft amendments to the Articles of Association, and
the proxy form are published in Turkey’s Trade Registry Gazette at least 21 days prior to the Annual General Meeting. It includes
information on where the financial statements for the respective period as audited by the independent auditor, and are available for
inspection.
The Company announces any required documents related to the agenda items prior to the Annual General Meeting to the public, and
abides by legal processes and legislation in all announcements. Within the scope of the Annual General Meeting Agenda, the Annual
50
Other Information
Report, Financial Statements, Corporate Governance Compliance Report, Dividend Distribution Proposal, Independent Auditor’s
Report, and the new and old versions of the amended Articles of Association are made available for the inspection of shareholders at
the Company’s Headquarters and on the website, three weeks prior to the Annual General Meeting. In addition, a detailed explanation
is included in the information document about each and every agenda item. Investors are also provided with further information
regarding the Annual General Meeting, as set out by the Principles.
Shareholders are informed of the voting procedure which will be applied at the Annual General Meeting through the Company’s
website and announcements in newspapers. In Annual General Meetings, votes on the agenda items are taken by show of hands,
and an open voting method is used.
For shareholders who will be represented by proxy at the Annual General Meeting, the required schedule for procedures as well as a
sample proxy form is made available on the Company’s website and through announcements in newspapers.
Asking questions and expressing their opinions on the issues at the Annual General Meetings held under the supervision of
representative of the Ministry of Customs and Trade, are the most natural of shareholders rights. Accordingly, the Chairing Board
ensures, in accordance with the procedures, that the Company’s shareholders exercise their right to ask questions, to table
suggestions regarding agenda items, and to discuss their suggestions in the Annual General Meeting.
All minutes of Annual General Meetings and attendance lists for past years may be obtained from the company’s Head Office and the
Minutes of Annual General Meetings held in the past 5 years are also available on our corporate website. Additionally, the minutes are
made available at the Company’s Head Office, whenever demanded by shareholders.
In the Annual General Meeting held in 2013, shareholders were informed of the donations and aid made in 2012 on a separate agenda
item. The limit for donations in 2013 was set TL 2,100,000 for 2013.
5. Voting Rights and Minority Rights
There are no privileges regarding the exercise of voting rights set out in the Company’s Articles of Association.
Voting rights are exercised at the Annual General Meeting in accordance with the regulations concerning the representation and the
voting method. The Company abides by the CMB’s regulations on voting by proxy. The opportunity for equal, easy and proper voting
is provided to all shareholders.
There are no provisions in our Articles of Association regarding the representation of minority shareholders in the management or
cumulative voting process..
6. Dividend Rights
Our Company distributes profit in accordance with the provisions of the Turkish Commercial Code, the Capital Markets Law, the Tax
Law, and other applicable legislation as well as the relevant articles of our Company’s Articles of Association.
In determining profit distribution, the Company takes into account the long term strategies of the group, the capital requirements of
our Company, subsidiaries and affiliates, investments and financing policies, profitability and our cash position.
In principle, by taking the net profit for the period as stated in the financial statements, which are published in accordance with
Capital Market Legislation and subjected to independent audit, a minimum of 50% of the “distributable profit for the period”, which is
calculated in accordance with the Capital Market Legislation and other applicable laws and regulations, is distributed either in the form
of cash or as bonus shares.
If the minimum distributable profit is calculated to be less than 5% of the issued capital, no profit distribution is carried out.
The profit distribution policy and profit distribution proposal, which includes the details set out in the CMB’s Principles of Corporate
Governance and which are included in the annual report, are shared with shareholders at the Annual General Meeting and announced
to the general public on our Company’s website.
The dividend to be distributed, in line with the resolution adopted in the Annual General Meeting, may be wholly in cash or as bonus
shares; or partly in cash and partly as bonus shares.
51
Introduction
Activities
Sustainability
If the profit distribution is carried in a cash form, the distribution is completed by the end of the fifth month following the respective
accounting period, at the latest; if distribution is carried out in the form of bonus shares, it is completed by the end of the sixth month
following the respective accounting period.
Profit distribution is carried out in accordance with the relevant article of our Company’s Articles of Association.
Our Company’s dividend distributions in recent years are as follows:
YEARS
From 2008 Profit
From 2009 Profit
From 2010 Profit
From 2011 Profit
From 2012 Profit
CAPITAL (TL)
24,000,000
24,000,000
24,000,000
24,000,000
24,000,000
% OF DIVIDEND BY ISSUED
CAPITAL
30.00%
85.00%
62.50%
200%
266.67%
AMOUNT OF DISTRIBUTED
DIVIDEND (TL)
7,200,000
20,400,000
15,000,000
48,000,000
64,000,000
7. Transfer of Shares
Our Company’s Articles of Association do not include any provisions or practices that restrict the transfer of shares.
Only the records in the share ledger, which are maintained by the Central Registry Agency, are taken into consideration. Individuals
whose accounts are found in the share ledger are accepted as holders of the dividend right on the share or as a shareholder.
Capital Market Board’s regulations are applied for the transfer of registered shares that are listed in the stock market.
SECTION II – PUBLIC DISCLOSURE AND TRANSPARENCY
8. Disclosure Policy
Otokar implements a disclosure policy which aims to provide accurate, complete, timely, and easily understandable information to
the public in an efficient, continuous and transparent manner. Otokar aims to create an efficient and an open communication platform
by uniformly sharing its vision, goals, past performance and expectations with the public, relevant authorities, present and potential
investors and shareholders, and by announcing its financial data, with the exception of trade secrets, in accordance with the generally
accepted accounting principles and the provisions of the Capital Market Law.
The Disclosure Policy at Otokar includes procedures setting out what information will be shared with the public, in addition to such
information as required by the legislation, how frequently and by which means such information will be announced to the public,
how frequently the Board of Directors and/or managers will speak to the media, the frequency of meetings that aim to inform the
public, and what method will be used to reply to questions. The Disclosure Policy has been approved by our Board of Directors and
presented to the Annual General Meeting. The Company’s disclosure policy is also available on the Company’s website.
The Board of Directors is in charge of establishing, overseeing, and carrying out the necessary updates to the Disclosure Policy. The
Company’s Disclosure Policy is presented to the shareholders at the General Meeting and announced to the public on the website,
after being approved by the Board of Directors.
In all of its practices related to public disclosure, Otokar complies with Capital Market Legislation and strives to implement the most
efficient communication policy within the framework of the CMB’s Principles of Corporate Governance.
The Company’s media relations are carried out by the Corporate Communications Unit, and information may be obtained from Mrs.
Beril Aksoy Gönüllü by e-mail (kyl@otokar. com.tr) and/or by phone (+90 216 489 29 50/extension 268).
The Financial Affairs and Shareholder Relations Unit is responsible for informing the public. All necessary information and documents
are made available to the public through this unit. (Mr. Hüseyin Odabaş and Mr. İrfan Özcan may be reached by e-mail (arf@otokar.
com.tr) and/ or by phone (+90 264 229 22 44/ extension 6200).
52
Other Information
9. The Company’s Corporate Website and its Content
Our Company’s website address is www.otokar.com.tr, where current and past information can be accessed. The website includes
comprehensive information about the Company, both in Turkish and English. The website is updated as developments occur, and
features an “Investor Relations” section which contains subjects related to Corporate Governance Principles. The Investor Relations
section contains content belonging to the last 5 years. The principles regarding the management of our website are set out in our
Information Policy. Our website is written in our Company’s letterhead.
The Company’s shareholder structure is included in the Company’s corporate website. Accordingly, Koc Holding is the largest
shareholder with 44.68% of the shares in the Company, amounting to paid-in capacity of TL 10,722,750, followed by Ünver Holding,
which holds 24.81% of the shares amounting to TL 5,954,944 in paid-in capital, and there are no other parties among the Company’s
shareholders which hold more than 5% of the shares.
10. Annual Report
The annual report is prepared under the supervision of the Board of Directors, and covers all information as required by the Principles
of Corporate Governance. The annual report is prepared in detail in order to provide complete and accurate information to the public
about the Company’s activities.
SECTION III - STAKEHOLDERS
11. Informing Stakeholders
If and when necessary, the Company’s stakeholders are either invited to meetings on matters concerning them or informed by means
of telecommunication devices. Public announcements are published through the media, and employees are informed at various events
organized by the Company.
The Company aims to inform not only its shareholders but all stakeholders by allowing their attendance at Annual General Meetings
as well as through information on our website, annual reports, press releases, and all other practices carried out within the scope of
the Company’s disclosure policy. Important announcements, changes in management and press releases are issues in our intranet
on which our employees have access in the Company. Moreover, the Corporate Communication Unit publishes a magazine entitled
“Otokar Hattı” which is followed by the Company’s employees, dealers and customers. The E-bulletin named “Otokar’da Bu Ay” is
published within the company, which aims to share all important news concerning Otokar with the Company’s employees. Relations
with dealers are maintained at the highest level through meetings and visits with general or regional dealers.
Stakeholders may access the Audit Committee through the contact information provided on the Company’s website and/or intranet,
concerning any practices which violate the law, or are ethically inappropriate.
12. Participation of Stakeholders in the Management
Stakeholders may participate in the management’s improvement efforts, actively express their opinions and impart comments in
accordance with the procedures implemented within the organization. Such practices include the EFQM model, self-assessment
meetings which are attended by all white- and blue- collar employees, and open-door meetings, all of which are developed on the
basis of a total quality philosophy and which aim to increase productivity. The Company also organizes regular meetings where
employees, suppliers and customers can express what they require from the Company. In addition, a number of training programs and
various surveys, such as the “working life evaluation questionnaire”, are carried out within the scope of the Company’s HR policies.
From dealer network meetings to factory visits of shareholders, the Company strives to reach out to stakeholders and thus have a
greater impact on society. Additionally, the Company implements a system through which customer demands received by the sales
and the dealer network can be tracked, hence enabling necessary measures to be taken and feedback to be provided.
13. Human Resources Policy
Within the scope of our Company’s human resources policy, recruitment and promotion criteria are set out in written form. The Human
Resources policy adheres to the principles of;
• The right person for the right job
• Equal pay for equal work; differentiation according to performance
• Recognition and appreciation of success
• Equal opportunities for everyone
53
Introduction
Activities
Sustainability
Accordingly, the Company aims to continuously improve the competency of its workforce and to maintain its competitive advantage
in the global arena. With this purpose, all human resources processes are pre-defined by certain procedures and announced to the
employees.
The Company’s human resources policy has already been established and is currently is in effect. Issues such as recruitment
policies, career planning, improvement and training policies for employees are dealt with under Personnel Regulations. While various
committees have been established which are responsible for relations with employees, no employee representative has yet been
selected or appointed. The Company acts in harmony with the Koç Group’s Human Resources policies, and the rights and working
conditions of both white- and blue-collar employees are secured so as to ensure no employee is subjected to any discrimination or ill
treatment. No complaints were received in this regard during the period.
Employees’ job descriptions are defined and shared with the employees. Practices related to performance and rewards are carried out
through an electronic platform, Koç@İnsan, which is open to all employees, and serves to inform employees of the Company’s goals
as well as measure their performance in realizing these goals. Realizations are shared with the employees through feedback meetings.
14. Ethical Rules and Social Responsibility
Otokar acts appropriately in all of its domestic and international activities and relations with business partners, the wider society, its
customers, suppliers, shareholders and employees, and strives to expand such behaviour not only in its sector but also to a larger
platform. The Company announces how it plans to achieve this purpose on its website, under the section Otokar’s Ethics.
Within the scope of its corporate social responsibility efforts, Otokar carries out activities both in the region where its factory is located
while also targeting the general public, in order to contribute to and create value for the society. Detailed information concerning these
efforts are included in the Annual Report. The Company did not receive any negative notices during the period on account of damage
caused to the environment. There Company keeps records of its activities, principally consisting of environmental impact reports.
SECTION IV - BOARD OF DIRECTORS
15. The Structure and Formation of the Board of Directors
Information relating to the current members of our Board of Directors (BoD) is summarized in the table below;
Name Surname
Executive
Member or
not
Executive
Member
Position Regarding
Independence
Date
Appointed
Non Independent
Member
27.03.2013
1 Year
Non Independent
Member
27.03.2013
1 Year
Osman Turgay Durak
Non Independent
Member
Non Independent
Member
Non Independent
Member
Non Independent
Member
27.03.2013
1 Year
27.03.2013
1 Year
27.03.2013
1 Year
27.03.2013
1 Year
İsmet Böcügöz
Independent Member 27.03.2013
1 Year
Abdulkadir Öncül
Independent Member 27.03.2013
1 Year
Kudret Önen
Ali Tarık Uzun
Ahmet Serdar Görgüç Executive
Member
54
Duty Term
Assignments in BoD and
Committees
Duties Outside
Company
Directors, Chairman of the
Executive Committee, Member
of the Risk Management
Committee
Koç Holding A.Ş. Management
Member of the Corporate
Governance Committee
Member of the Executive
Committee
Chairman of the Audit
Committee, Chairman of
the Corporate Governance
Committee
Chairman of the Risk
Management Committee,
Member of the Audit Committee
Ünver Holding A.Ş. –
Directors
Otokar Otomotiv ve Sav.
San. A.Ş. - Management
Turkish Employers'
Association of Metal
Industries (MESS) Management
Other Information
The detailed CV’s of the Members of the Board of Directors are included in the annual report.
The duties of the Chairman of the Board and the General Manager are performed by separate persons. While Board Members are
encouraged to spare the required time to fulfil their obligations to the company, there are no rules restricting them from assuming other
duties outside the Company. Considering that independent members, in particular, may contribute significantly to the Board with their
business experience and specific knowledge, no such restrictions have been deemed necessary. The CV’s of each Board Member
and their other duties outside the company are shared with the shareholders prior to the Annual General Meeting.
A total of two nominees for independent members were submitted to the Corporate Governance Committee in 2013. Declarations to
become a nominee and the CV’s of these individuals shall be evaluated in the meetings of the Corporate Governance Committee and
the Board of Directors meetings on 5th March, 2013. All of these individuals are determined as nominees to be independent members.
All independent board members submitted their declarations of independence to the Corporate Governance Committee. During the
2013 activity period, there were no situations which contravened their independence.
16. Operating Principles of the Board of Directors
Issues or agendas requiring the resolution of the Board of Directors are arranged and prepared periodically or whenever the need
arises. Therefore, the number of Board meetings may vary according to such needs. The Board of Directors drew up 14 resolutions
in 2013. Independent board members participated in meetings. The Board convenes for meetings whenever the operations of the
Company so require. Although there is no dedicated secretariat established to facilitate communication, the Finance Department
prepares the meeting agenda, records the resolutions, and monitors the outcome of resolutions.
Should any issues which require the Board’s resolution as dictated by the Company’s Articles of Association arise, the upper
management of the Company notifies the Board Members of the situation, and the meeting agenda is set accordingly. Otherwise, a
meeting agenda may also be drawn up when a Board Member notifies the upper management of a specific matter which requires the
Board’s resolution.
Issues which need to be discussed by the Board of Directors are gathered and compiled by the Finance Department and the meeting
agenda is drawn up accordingly.
The Finance Director of Otokar A.Ş. is in charge of establishing the agenda of the Board meetings, preparing the Board’s resolutions,
and informing and communicating with the Board members.
Different views expressed during the Board meetings as well as the reasons for casting opposing votes are recorded in the minutes
of the resolutions. However, since no such opposing or discordant views were recently expressed, no disclosures were made to the
public in this regard.
In 2013, there were no related party transactions or significant transactions which would be required to be presented to the Annual
General Meeting for approval as a result of disapproval from independent members.
“Manager Responsibility Insurance” is provided for our Company’s Board of Directors and senior managers.
17. The Number, Structure and the Independence of the Committees Formed by the Board of Directors
In our Company, the Board of Directors forms several committees in order to effectively fulfil its duties and responsibilities, and
these committees carry out their activities in accordance with specified procedures. Our Committees reach certain decisions after
independently conducting a number of studies before presenting these in the form of proposals for the Board’s consideration, with the
Board then reaching the final decision.
Members who have responsibility in more than one committee carry out the communication between committees on related subjects
and enhance the opportunities for cooperation. The Board of Directors believes that it has obtained the expected benefit from the
committee’s work.
Detailed information on the operating principles of these committees as well as the CV’s of Board Members are made available on the
Company’s website.
55
Introduction
Activities
Sustainability
Audit Committee
The Audit Committee, which was established in accordance with the decision of the Board of Directors on 29th April, 2003 fulfils the
duties set out in the Capital Market Legislation.
During the Board of Directors Meeting dated 4th April, 2013, the decision was taken that the Audit Committee would be composed of
2 independent members, with İsmet Böcügöz and Abdulkadir Öncül appointed as the head and member of the committee.
The working principles of the committee are announced on our Company’s website. The Audit Committee submitted the following
decisions to the Board of Directors in written form; the selection an independent auditor, and opinions concerning the annual and the
interim financial statements that will be announced to the public, in compliance with the accounting principles that the companies
follows in truth and in practice.
Corporate Governance Committee
The Corporate Governance Committee was established in accordance with the Board of Directors’ decision dated 25th May, 2012
to ensure the Company’s compliance with the Corporate Governance Principles and to provide recommendations on improving the
application of principles which have not yet been applied to the Board of Directors, and examine the reasons in the event of them
not being applied. In their meeting dated 4th April, 2013, the Board of Directors reached the decision that the Corporate Governance
Committee would be composed of two members and that İsmet Böcügöz, who is an independent member, and Ali Tarık Uzun
would be appointed as the head and as a member of the committee, respectively. The board also decided to set up the Nomination
Committee and Wage Committee within the scope of the Communiqué. The working principles of the committee were announced on
our Company’s website, and it evaluates corporate governance applications and Corporate Governance Compliance Report.
Risk Management Committee
In our Company’s Board of Directors Meeting dated 11th July, 2012, the decision was taken to establish the Risk Management
Committee, which would work on early detection of risks that could pose a threat to the Company’s presence, development and
continuity, and on applying necessary measures to tackle these risks in order to ensure compliance with article 378 of Law 6102 of
the Turkish Commercial Code, which entered force in July 2012. During the Board of Directors Meeting dated 4th April, 2013, it was
decided that the committee would be composed of two members, with Abdulkadir Öncül, who is an independent member, and
Kudret Önen to be appointed as the head and as a member of the committee, respectively. The working principles of the committee
were enounced on our Company’s website. The committee convenes at least six times a year.
Executive Committee
The Executive Committee was established in our Company’s Board of Directors meeting dated 25th May, 2012 with the purpose
of increasing the effectiveness of Board of Directors by ensuring effective coordination between the Board of Directors and the
administrative structure, to ensure effectiveness of investment in fields that are relevant to the Company’s strategic targets and
in business development. In the Board of Directors meeting dated 4th April, 2013, Kudret Önen and Ahmet Serdar Görgüç were
appointed as members of the committee.
The working principles of the committee are announced on the website and the committee holds at least one regular meeting per
month. The committee is responsible for the following: Informing the Board of Directors of developments in the Company and the
sector that the company operates in when necessary, coordinating the Board of Directors and the company’s administrative structure
in the event that the Board of Directors cannot meet at the desired frequency and time, developing strategies that are appropriate for
the Company, and issuing recommendations concerning the effectiveness of operations.
56
Other Information
18. Risk Management and the Internal Control Mechanism
A risk management and internal control mechanism was established to deal with the Company’s financial and administrative activities.
The Financial Affairs and Internal Audit Departments are in charge of ensuring that it operates effectively and in accordance with capital
markets legislation and regulations.
Our Company’s financial statements are inspected by the Audit Committee, which is formed by the Board.
The Company is audited, in a process which includes financial control and risk analyses, by the Audit Group Presidency, which
operates under the Board of Directors of Koç Holding A.Ş., one of the Company’s major shareholders.
The main risks which our Company is exposed to come under four main headings - financial risks, strategic risks, operational risks
and legal risks. The Risk Management Committee and Board of Directors are periodically informed of these risks. Detailed information
concerning risk management is included in the related part of activity report.
19. The Company’s Strategic Goals
Otokar preserves the local and national identity characteristics in its products by developing its own technology and aims to ensure
the continuous satisfaction of its customers, employees, and shareholders by embracing a philosophy of total excellence.
Strategic Goals
• To grow by an average of 15% over certain periods by achieving a return of at least 15% on shareholders’ equity, and by increasing
the value of shares,
• To focus on the manufacture of breakthrough products which have international competitive power,
• To invest in technology in order to become the leader or the second player in the industries we operate in,
• To boost the brand’s strength by commanding technology in the industries we operate in,
• To increase the share of international sales in total revenue by increasing our exports and international operations.
The strategic goals determined in line with the Company’s vision and mission are evaluated by the Board of Directors. The values set
out in the Company’s mission and vision, which have been established by the Senior Management and approved by the Board of
Directors, are included in the Annual Report. The efforts of the related departments in establishing and reaching strategic goals are
monitored and presented to the Board of Directors by the Company’s senior management. By evaluating the performance recorded
in previous years, the Board of Directors reviews the Company’s activities during the year and the strategic goals set by the Senior
Management and reaches decisions accordingly. Financial performance is followed alongside the budget, and developments in
strategic matters are also followed and recommendations are provided.
20. Remuneration of the Board of Directors
Payments and benefits offered to the Board of Directors and senior managers, as well as the criteria for determining such
remuneration, are detailed in our Company’s “Remuneration Policy regarding Board Members and Senior Managers”, which was
presented to the shareholders on the Company’s website as part of the “Information Document”, three weeks prior to our Annual
General Meeting held on 27th March, 2013. This was then approved at the Annual General Meeting and entered effect. Total
remuneration paid to the Board Members and Senior Managers is evaluated annually by the Corporate Governance Committee and
the Board of Directors. Total remuneration paid to the Board Members and Senior Managers is specified in the notes to financial
statements, for the attention of the general public. The Company does not undertake any transactions which may lead to conflicts of
interest, such as lending money, issuing loans or offering guarantees in favour of our Board Members or managers.
57
Introduction
Activities
Sustainability
Risk Management
a. Risk Management
The risk management policy at Otokar is led by the General Manager under the supervision of the Board of Directors. Risk
management is carried out in coordination with all managers, spread across all levels of the organization and is implemented in line
with the Company’s strategies, with the aim of foreseeing and monitoring potential any risks which may prevent the Company from
reaching its goals, and of drawing up action plans to tackle such risks.
The Risk Management Committee was established to determine and assess any strategic, operational, financial, legal and other
risks which may undermine the Company’s presence or growth; to calculate the impact and probability of such risks, to report and
manage these risks according to the Company’s risk profile; and also to table suggestions to the Board of Directors concerning the
implementation of the necessary measures against such risks, taking them into consideration in decision making processes and
establishing and integrating effective internal control mechanisms.
In addition to its own risk policy, Otokar also acts in line with the risk policy implemented by the Koç Group.
Otokar follows its risks as financial risks, strategic risks, operational risks and legal risks.
Financial Risks
Includes exchange rate risk, liquidity risk, credit risk, interest risk and receivable risk
Currency Risk: is managed using derivative transactions within the limits determined by the Group by following updated currency
positions to avoid exchange rate risk.
Liquidity Risk: managed by maintaining the ratio of cash and cash equivalents to total short term liabilities at the targeted levels.
Credit Risk: is kept under control with cash management and liquidity risk follow-up. As part of the Company’s policy, no mortgage,
pledge or such additional collateral is provided in credit usage.
Interest Risk: Short term and long term borrowing is carried out in line with the Company’s policies. A policy of using credits with
flexible maturities has been implemented.
Receivable Risk: Receivables are followed within the limits of collaterals. The coherence of debt-receivable days to expected days in
budget is followed closely.
58
Other Information
Strategic Risks
Strategic risks are structural risks that may prevent the company from reaching its short, medium or long term strategic targets
and which are among the most important elements of preparing for the future. These risks are related to products, customers,
competitors, brands, the market, industry, management and any changes in the management.
Potential risks and opportunities are followed in strategic risk management, in view of budget and strategic plans which serve as
indicators of future plans, macroeconomic developments, the market and sector dynamics.
Operational Risks
Operational risks are composed of losses such as those from business processes which may affect basic activities, personnel and
systems that are affected by internal systems and processes and external factors. Risk areas such as sales, product development,
capacity, information management, technology, brand management, earthquake and fire are risks that are included in this category.
Insurance to manage operational risks is purchased through a central purchase system.
Legal Risks
Legal risks and opportunities are followed by the management and legal advisors with respect to compliance with the current laws,
regulations and standards. The legal conformity (HUY) test and contract supervision system (LERIMAN) are applied in parallel with the
Group’s implementations.
b. Work of the Risk Management Committee
During the Board meeting of Otokar Otomotiv ve Savunma San. A.Ş., dated 11th July, 2012, the decision was taken to establish a
Risk Management Committee in order to predetermine any risks which may undermine the Company’s presence or growth, to take
the necessary measures to tackle such risks, and to carry out risk management. The reason for establishing the Risk Management
Committee was to enable the committees established by the Board to function effectively, and also to comply with Article 378 of the
Turkish Commercial Code, Law No. 6102, which entered effect on 1st July, 2012. During the Board of Directors meeting dated 4th April,
2013, it was decided that the committee would be composed of two persons, and the committee would be headed by Abdulkadir
Öncül, who is an independent Board member. The operating principles of the committee are announced on our Company’s website.
The committee holds at least 6 meetings per year.
The committee held 7 meetings in 2013. The committee evaluates the Company’s principles for the Risk Management System and
Risk Reporting, examines Risk Reports which were prepared periodically and expresses its views on measures that are deemed
necessary to tackle areas where there is non-compliance with the limits determined in the Risk Management System. Reporting work
and committee evaluations are submitted to the attention of the Board of Directors.
59
Introduction
Activities
Sustainability
Internal Control System and Internal Audit
The establishment of the Internal Control System aims to achieve the following; to remain neutral and independent in all transactions,
to add value to the Company, to ensure that activities comply with the strategies, targets and legislation, to provide a contribution to
the realization of the Company’s main targets, principles and strategies, and to increase effectiveness and efficiency. The Internal Control system consists of standard definitions of the business processes, job descriptions, authorization system, policies
and written procedures.
The Internal Audit unit regularly evaluates the Internal Control system for effectiveness. The Internal Audit unit directly reports to the
General Manager in order to function independently.
Accounts and financial tables are examined by the Committee responsible for Audit and Internal Audit Unit. In addition, they are
audited by an independent audit company, Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi (A
member firm of Ernst & Young Global Limited).
Otokar Otomotiv ve Savunma Sanayi A.Ş. had not been subject to any special or public inspections.
Report on Related Parties
2013 Report on Related Parties
In its meeting dated 28 February, 2014, the Company’s Board of Directors approved the report detailing common and ongoing
transactions conducted with related parties, in accordance with CMB’s Communiqué, Serial: II, No:17.1. The conclusion of this report
is as follows:
“Pursuant to Capital Markets Board’s Communiqué, article 10 of Serial: II, No: 17.1; due to the fact that the amount of the Company’s
common and ongoing product sales transactions with Ram Dış Ticaret A.Ş. within 2013 accounting period have exceeded 10% of
cost of sales and revenue which will be disclosed to the public, and due to the expectation that related party transactions will remain
above this limit in 2014, the terms of transactions made with Ram Dış Ticaret A.Ş., pricing policy, and reasons for choosing this policy
are explained in this report, and information regarding the compliance of the transactions with market conditions is provided.
60
Other Information
Report on Affiliated Companies
2013 Report on Affiliated Companies
The report, which explains our relations with major shareholders within the scope of Turkish Commercial Code (TTK) article 199 was
approved in Board of Directors meeting, held on 28th February, 2014. The result of the report is below:
“Pursuant to Article 199 of the Turkish Commercial Code No. 6102, which entered effect on 1st July, 2012, the Board of Directors of
Otokar Otomotiv ve Savunma Sanayi A.Ş. is required to prepare a report on the Company’s transactions of the previous year with
its majority shareholder and its subsidiaries, within the first three months of the calendar year; and to include the conclusions of this
report in the annual report. The details of the transactions between Otokar Otomotiv ve Savunma Sanayi A.Ş. and the related parties
are included in footnote No. 27 of the financial statements.
The following was expressed in the report which was prepared by Otokar Otomotiv ve Savunma Sanayi A.Ş.’s Board of Directors
on 28th February, 2014: The Board of Directors of Otokar Otomotiv ve Savunma Sanayi A.Ş. reached the conclusion that, in all
transactions conducted in 2013 between Otokar Otomotiv ve Savunma Sanayi A.Ş. and its majority shareholder, as well as its
subsidiaries, the transactions were either completed or the required measures were taken, and, in cases where the Company refrained
from taking the required measures, due consideration was provided based on all facts and conditions known to the Company’s Board
at the time, and, in this context, that there were no measures taken, or which were refrained from, that could harm the Company, and,
accordingly, there were no transactions or measures that require balancing.”
61
Introduction
Activities
Reports and Financial Statements
(Convenience translation of financial statements originally issued in Turkish)
62
Sustainability
Other Information
Report by the Committee Responsible from Audit
We have convened to examine and provide opinions concerning the unconsolidated financial tables pertaining to the period
between 1 January - 31 December, 2013 which was prepared by Otokar Otomotiv ve Savunma Sanayi A.Ş. management
and which comply with the Turkish Accounting Standards/Turkish Financial Reporting Standards (“TMS/TFRS) and formats
determined by the CMB in accordance with the Capital Market Board’s communiqué entitled “Financial Reporting in Capital
Market Communiqué” numbered II.14.1, and the independent auditor’s report, which was prepared by Güney Bağımsız Denetim
ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi (A member firm of Ernst & Young Global Limited).
Evaluations were conducted in our examination related to the compliance of the financial tables with accounting principles which
the company follows, correctly and in practice. The views of the independent auditor and the engagement director of the audit
company were sought when necessary.
Within the scope of information submitted to us and as a result of our evaluations, we reached the view that the nonconsolidated financial statements pertaining to the 1 January-31 December, 2013 period complied with the accounting principles
that the company follows, correctly and in practice. We submit these financial statements for the approval of the Board of
Directors.
Sincerely,
İstanbul, February 14, 2014
The Committee Responsible for the Audit
İsmet Böcügöz
Board Member
Abdulkadir Öncül
Board Member
63
Introduction
Activities
Sustainability
Table of contents
Page
Report of independent auditors
65 - 66
Balance sheet
67 - 68
Comprehensive income statement
Statement of changes in equity
Cash flow statement
Notes to financial statements
69
70 - 71
72
73 - 123
Dipnot 1.
Organization and nature of operations
73
Dipnot 2.
Basis of presentation of financial statements
73
Dipnot 3.
Segment reporting
89
Dipnot 4.
Cash and cash equivalents
89
Dipnot 5.
Financial investments
89
Dipnot 6.
Financial liabilities
90
Dipnot 7.
Derivative financial instruments
91
Dipnot 8.
Trade receivables and payables
92
Dipnot 9.
Other receivables and payables
94
Dipnot 10. Inventories
94
Dipnot 11. Costs and billings on uncompleted contracts and other payables
95
Dipnot 12. Property, plant and equipment
95
Dipnot 13. Intangible assets
97
Dipnot 14. Government grants and incentives
98
Dipnot 15. Provisions, contingent assets and liabilities
98
Dipnot 16. Employee benefits
101
Dipnot 17. Prepaid expenses, deferred revenue, other assets and liabilities
102
Dipnot 18. Shareholders’ equity
103
Dipnot 19. Sales and cost of sales
105
Dipnot 20. Research and development expenses, marketing, sales and distribution expenses,
general administrative expenses
106
Dipnot 21. Expenses by nature 106
Dipnot 22. Other operating income/expenses
107
Dipnot 23. Financial income
108
Dipnot 24. Financial expense
108
Dipnot 25. Tax assets and liabilities
108
Dipnot 26. Earnings per share
110
Dipnot 27. Related party disclosures
111
Dipnot 28. Nature and level of risks arising from financial instruments
115
Dipnot 29. Financial instruments
122
Dipnot 30. Subsequent events
123
Dipnot 31. Other matters which are significant to the financial statements or which should be disclosed
for the purpose of true and fair interpretation of the financial statements
123
64
Other Information
Independent Auditor’s Report
Güney Bağımsız Denetim ve
Serbest Muhasebeci Mali
Müşavirlik A.Ş.
Büyükdere Cad. Beytem Plaza
No: 22 K: 9-10, 34381 - Şişli
İstanbul - Turkey
Phone +90 (212) 315 30 00
Fax
+90 (212) 230 82 91
İnternet www.ey.com
To the Board of Directors of
Otokar Otomotiv ve Savunma Sanayi Anonim Şirketi:
We have audited the accompanying financial statements of Otokar Otomotiv ve Savunma Sanayi Anonim Şirketi (the Company),
which comprise the balance sheet as at December 31, 2013, and the comprehensive income statement, statement of changes in
equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory
notes.
Management’s responsibility for the financial statements
The Company’s management is responsible for the preparation and fair presentation of financial statements in accordance
with the Turkish Accounting Standards (“TAS”) published by the Public Oversight Accounting and Auditing Standards Authority
(“POA”) and for such internal controls as management determines is necessary to enable the preparation and fair presentation of
financial statements that are free from material misstatement, whether due to error or fraud.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with standards on auditing issued by the Capital Market Board in Turkey. Those standards require that we comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement
of the financial statements, whether due to fraud or error. In making those risk assessments; the Company’s internal control
system is taken into consideration. Our purpose, however, is not to express an opinion on the effectiveness of internal control
system, but to design procedures that are appropriate for the circumstances in order to identify the relation between the financial
statements prepared by the Company and its internal control system. An audit includes also evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the Company’s management, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to establish a basis for our audit opinion.
Opinion
In our opinion, the accompanying financial statements present fairly, the financial position of Otokar Otomotiv ve Savunma
Sanayi Anonim Şirketi as of December 31, 2013 and its financial performance and cash flow for the year then ended in
accordance with the Turkish Accounting Standards (Note 2).
65
Introduction
Activities
Sustainability
Independent Auditor’s Report
Reports on independent auditor responsibilities arising from other regulatory requirements
In accordance with Article 402 of the Turkish Commercial Code no. 6102, the Board of Directors submitted to us the necessary
explanations and provided required documents within the context of audit, additionally, no significant matter has come to our
attention that causes us to believe that the Company’s bookkeeping activities for the period 1 January - 31 December 2013 are
not in compliance with the code and provisions of the Company’s articles of association in relation to financial reporting.
Pursuant to Article 378 of Turkish Commercial Code, Board of Directors of publicly listed companies are required to form an
expert committee, and to run and to develop the necessary system for the purposes of: early identification of causes that
jeopardize the existence, development and continuity of the company; applying the necessary measures and remedies in this
regard; and, managing the related risks. According to subparagraph 4, Article 398 of the code, the auditor is required to prepare
a separate report explaining whether the Board of Directors has established the system and authorized committee stipulated
under Article 378 to identify risks that threaten or may threaten the company and to provide risk management, and, if such a
system exists, the report, the principles of which shall be announced by the POA, shall describe the structure of the system and
the practices of the committee. This report shall be submitted to the Board of Directors along with the auditor’s report. Our audit
does not include evaluating the operational efficiency and adequacy of the operations carried out by the management of the
Company in order to manage these risks. As of the date of balance sheet, POA has not announced the principles of this report
yet, accordingly, no separate report has been drawn up relating to it. On the other hand, the Company formed the mentioned
committee on July 11, 2012 and it comprised of two members. The committee met three times in 2012 and seven times in 2013,
ten times in all since establishment for the purposes of early identification of risks that jeopardize the existence of the company
and its development, applying the necessary measures and remedies in this regard, and managing the risks, and has submitted
the relevant reports to the Board of Directors.
Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi
A member firm of Ernst & Young Global Limited
Ferzan Ülgen, SMMM
Partner
February 14, 2014
İstanbul, Turkey
66
Other Information
Otokar Otomotiv ve Savunma Sanayi Anonim Şirketi
Balance sheet as of December 31, 2013
(Currency - Turkish Lira (TL) unless otherwise indicated)
Current period
(Audited)
December 31, 2013
Prior period
(Audited)
December 31, 2012
8.884.174
399.220.867
71.374.049
327.846.818
2.524
297.797.165
74.985.116
17.053.925
47.906.245
224.693.650
24.550.065
200.143.585
1.715
252.632.987
133.453.785
21.480.578
797.943.771
680.168.960
8
9
192.938.324
58.112
59.397.503
47.971
11
5
12
13
25
93.597.289
239.280
120.842.623
126.292.737
43.338.020
61.325.046
239.280
125.112.154
100.041.870
11.092.336
577.306.385
357.256.160
1.375.250.156
1.037.425.120
Notes
Assets
Current assets
Trade receivables
- Due from related parties
- Trade receivables, third parties
Other receivables
Inventories
Prepaid expenses
Other current assets
4
27
8
9
10
17
17
Total current assets
Non-current assets
Trade receivables
Other receivables
Estimated earnings in excess of billings on
uncompleted contracts
Financial investments
Property, plant and equipment
Intangibles
Deferred tax asset
Total non-current assets
Total assets
The accompanying policies and explanatory notes on pages 73 through 123 form an integral part of these financial statements.
67
Introduction
Activities
Sustainability
Balance sheet as of December 31, 2013
Current period
(Audited)
December 31, 2013
Prior period
(Audited)
December 31, 2012
138.276.975
2.686.797
1.231.950
102.434.509
13.154.537
89.279.972
19.143.540
10.819.100
306.326.515
1.467.624
7.043.047
95.999.670
1.615.447
48.064.941
2.028.308
2.193.011
85.026.598
8.988.915
76.037.683
17.165.965
1.441.022
146.855.524
670.521
225.619.049
1.076.908
687.045.174
530.141.847
332.047.500
7.055.794
26.957.401
20.616.223
6.341.178
48.874.707
236.099.752
2.332.562
21.474.019
17.030.080
4.443.939
5.644.080
414.935.402
265.550.413
18
18
18
24.000.000
52.743.030
29.078.147
24.000.000
52.743.030
22.798.147
18
18
18
(3.551.453)
74.438.113
96.561.743
(2.526.430)
66.441.516
78.276.597
273.269.580
241.732.860
1.375.250.156
1.037.425.120
Notes
Liabilities
Current liabilities
Short term financial liabilities
Short term portion of long term financial liabilities
Derivative financial liabilities
Trade payables
- Due to related parties
- Trade payables, third parties
Employee benefit obligations
Other payables
Deferred income
Government incentives and grants
Current income tax liabilities
Short term provisions
Other current liabilities
6
6
7
8
27
8
17
9
17
14
25
15
17
Total current liabilities
Non-current liabilities
Government incentives and grants
Long term provisions
- Provision for employee benefits
- Other provisions
Deferred income
6
14
16
15
17
Total non-current liabilities
Shareholders’ equity
Parent Company’s equity
Paid-in share capital
Inflation adjustment on equity items
Restricted reserves
Accumulated other comprehensive income and expense that is not
subject to reclassification to income or loss
Retained earnings
Net income for the year
Total shareholders’ equity
Total liabilities
68
Other Information
Comprehensive income statement for the year ended December 31, 2013
Notes
Net sales
Cost of sales (-)
Current Period
Prior Period
Audited
Audited
January 1 - December 31, 2013 January 1 - December 31, 2012
19
19
1.401.552.934
(1.086.542.059)
315.010.875
1.004.492.232
(780.994.330)
223.497.902
20
20
20
22
22
(118.705.403)
(38.480.120)
(25.796.799)
101.332.808
(75.374.133)
157.987.228
(78.377.147)
(33.445.652)
(17.645.232)
124.952.519
(106.502.522)
112.479.868
Income from investment activities
Expenses from investment activities
306.498
-
15.169
-
Operating income before financial
income/(expense)
158.293.726
112.495.037
23
24
3.007.922
(53.053.328)
108.248.320
5.102.020
(33.414.592)
84.182.465
25
25
(43.676.005)
31.989.428
96.561.743
(3.876.947)
(2.028.921)
78.276.597
Actuarial loss arising from employee benefits
Tax effect
(1.281.279)
256.256
(2.364.524)
472.905
Other comprehensive income/(expense)
after tax
(1.025.023)
(1.891.619)
Total comprehensive income
95.536.720
76.384.978
0,402
0,326
Gross profit
Marketing, sales and distribution expenses (-)
General administrative expense (-)
Research and development expenses (-)
Other operating income
Other operating expense (-)
Operating profit
Financial income
Financial expense (-)
Income before tax
Tax income/expense
- Tax expense for the year (-)
- Deferred tax income/(expense)
Net income
Earnings per share (kr)
26
69
Introduction
Activities
Sustainability
Statement of changes in equity for the year ended December 31, 2013
Paid-in
share capital
Inflation adjustment
on equity items
Restricted
reserves
24.000.000
24.000.000
-
52.743.030
52.743.030
-
18.118.147
18.118.147
4.680.000
-
-
-
-
Balance at December 31,2012
24.000.000
52.743.030
22.798.147
Balance at January 1, 2013
Change in accounting policy (Note 2.3)
Balance at January 1, 2013 (restated)
Transfer to retained earnings
Transfer to restricted reserves
Dividend paid
Net profit for the period
Other comprehensive income
24.000.000
24.000.000
-
52.743.030
52.743.030
-
22.798.147
22.798.147
6.280.000
-
-
-
-
24.000.000
52.743.030
29.078.147
Balance at January 1, 2012 previously reported
Change in accounting policy (Note 2.3)
Balance at January 1, 2012 (restated)
Transfer to retained earnings
Transfer to restricted reserves
Dividend paid
Net profit for the period
Other comprehensive income/(expense)
Balance at December 31,2013
70
Other Information
Accumulated other
comprehensive income and
expense that is not subject
to reclassification to
income or loss
Actuarial gains and losses
related to employee benefits
Retained
earnings
Net income
for the year
Total
shareholders’ equity
(634.811)
(634.811)
(1.891.619)
63.640.101
63.640.101
55.481.415
(4.680.000)
(48.000.000)
-
54.846.604
634.811
55.481.415
(55.481.415)
78.276.597
-
213.347.882
213.347.882
(48.000.000)
78.276.597
(1.891.619)
(1.891.619)
-
78.276.597
76.384.978
(2.526.430)
66.441.516
78.276.597
241.732.860
(2.526.430)
(2.526.430)
(1.025.023)
65.806.705
634.811
66.441.516
78.276.597
(6.280.000)
(64.000.000)
-
76.384.978
1.891.619
78.276.597
(78.276.597)
96.561.743
-
241.732.860
241.732.860
(64.000.000)
96.561.743
(1.025.023)
(1.025.023)
-
96.561.743
95.536.720
(3.551.453)
74.438.113
96.561.743
273.269.580
71
Introduction
Activities
Sustainability
Cash flow statement for the year ended December 31, 2013
(Audited)
Current period
January 1 - December 31, 2013
(Audited)
Prior period
108.248.320
84.182.465
40.447.945
3.340.044
(311.216)
28.233.403
(306.498)
33.686.402
30.258.066
3.930.224
40.236
17.345.018
(15.169)
26.195.253
13.353.300
(322.326)
2.309.088
19.225.508
(1.031.089)
2.736.485
992.842
247.903.970
164.634.331
(310.388.076)
10.388.085
(32.272.243)
(44.852.962)
62.895.322
17.407.911
86.102.407
(20.186.570)
(36.632.958)
(20.812.684)
(2.164.301)
(17.357.712)
(84.121.388)
(22.126.249)
6.530.916
42.281.232
10.223.077
(10.116.111)
(18.278.508)
(1.689.112)
(53.000.184)
80.368.561
(14.008.492)
(50.329.976)
2.215.686
(25.298.282)
(46.415.541)
1.092.115
Net cash used in investing activities
(62.122.782)
(70.621.708)
Cash flows from financing activities
Proceeds from bank borrowings
Repayments of bank borrowings
Interest payments
Interest received
Dividends paid
352.349.508
(186.193.000)
(26.377.939)
322.326
(64.000.000)
422.112.861
(324.424.422)
(17.030.560)
1.031.089
(48.000.000)
Net cash provided by financing activities
76.100.895
33.688.968
Net (decrease)/increase in cash and cash
equivalents
(39.022.071)
43.435.821
Notes
Cash flows from operating activities
Income before taxes
Adjustments to reconcile income before taxes to
net cash flows from operating activities:
Depreciation and amortization
Provision for retirement pay liability
Provision for impairment for inventories
Warranty provision expenses
Gain on sale of property, plant and equipment
Loan interest expense
Unrealised foreign exchange (income)/loss incurred
from borrowings
Demand deposit interest income
Provision for doubtful receivables
Forward transactions, net
12, 13
21
10, 21
15, 21
24
23
8, 22
Operating profit before changes in operating asset
and liabilities
Trade and other receivables
Estimated earnings in excess of billings on
uncompleted contracts
Inventories
Other current assets
Trade payables
Other liabilities, provisions and other current liabilities
Realized gain from forward transactions, net
Income taxes paid
Warranties paid
Employee termination benefits paid
15
16
Net cash (used in)/provided by operating activities
Cash flows from investing activities
Cash paid for acquisition of property, plant and
equipment
Cash paid for acquisition of intangible assets
Proceeds from sale of property, plant and equipment
12
13
Cash and cash equivalents at the beginning
of the year
4
47.906.245
4.470.424
Cash and cash equivalents at the end of the year
4
8.884.174
47.906.245
72
Other Information
1. Organization and nature of operations
Otokar Otomotiv ve Savunma Sanayi A.Ş. (“Otokar” or “the Company”) was established in 1963 and is registered in Istanbul,
Turkey and operating under the Turkish Commercial Code.
The Company operates in the automotive industry and off road vehicles, armoured vehicles, minibuses, midibuses and
autobuses, trailers, semi-trailers, light truck and cross-country comprises the majority of its production. The number of the
personnel in the Company is 2.264 (December 31, 2012 - 2.281).
The registered addresses of the Company are as follows:
Headquarters:
Aydınevler Mahallesi, Dumlupınar Cad. No: 58 A Bl.
34854 Küçükyalı/İstanbul
Factory:
Atatürk Cad. No: 6
54580 Arifiye/Sakarya
The Company has a subsidiary named “Otokar Europe SAS” with a capital of Euro 100.000, established on August 18, 2011
for the purpose of organizing export activities and increasing export sales. Since “Otokar Europe SAS” operations does not
materially affect the financial statements, it has not been subject to consolidation and has been presented at historical cost
value. (Note 5)
Financial statements have been authorized for issue by the Board of Directors of the Company on February 14, 2014 and
signed by Ahmet Serdar Görgüç, General Manager and Hüseyin Odabaş, Financial Vice General Manager on behalf of Board of
Directors of the Company. Although there is no such intention, the Company Management and certain regulatory bodies have the
power to amend the statutory financial statements after issue.
The Company conducts part of its business transactions with the Koç Holding A.Ş. and related parties. There are certain related
parties which are both customers and vendors of the Company. The Company is registered to the Capital Market Board (“CMB”)
and its shares are listed on the Borsa Istanbul (“BIST”), previously Istanbul Stock Exchange (“ISE”) since 1996.
As of December 31, 2013, the shares listed on the BIST are 29,91% of the total shares. As of December 31, 2013, the principal
shareholders and their respective shareholding percentages are as follows:
%
Koç Holding A.Ş.
Other
44,68
24,81
30,51
100,00
The Parent Company (Koç Holding A.Ş.), is controlled by Koç Family and the companies owned by Koç Family.
The shareholder, Ünver Holding A.Ş., is controlled by Ünver Family.
2. Basis of presentation of financial statements
2.1 Basis of presentation
The financial statements of the company have been prepared in accordance with the Turkish Accounting Standards/Turkish
Financial Reporting Standards, (“TAS/TFRS”) and interpretations as adopted in line with international standards by the Public
Oversight Accounting and Auditing Standards Authority of Turkey (“POA”) in line with the communiqué numbered II-14.1
“Communiqué on the Principles of Financial Reporting In Capital Markets” (“the Communiqué”) announced by the Capital
Markets Board of Turkey (“CMB”) on June 13, 2013 which is published on Official Gazette numbered 28676.
The Company maintains its books of account and prepares its statutory financial statements in Turkish Lira (TL) in accordance
with regulations on accounting and reporting framework and the Uniform Chart of Accounts issued by the Ministry of Finance.
73
Introduction
Activities
Sustainability
The financial statements have been prepared from statutory financial statements with adjustments and reclassifications for the
purpose of fair presentation in accordance with Turkish Accounting Standards as prescribed by POA. The adjustments are mainly
related with deferred taxation, retirement pay liability, prorate and useful life depreciation adjustment of fixed assets, accounting
of provisions, construction accounting for tank project and discount of receivables and payables.
The financial statements have been prepared under the historical cost convention, except derivative financial assets and liabilities
carried at fair value.
Functional and presentation currency
Functional and presentation currency of the Company is TL.
In accordance with the CMB’s resolution dated March 17, 2005 and numbered 11/367, the financial statements were restated
in accordance with International Accounting Standards (IAS) 29 (Financial Reporting in Hyperinflationary Economies) for the last
time as of December 31, 2004, since the objective conditions which require the application of restatement of financial statements
have not been realized and that based on the existing data CMB has foreseen that the indications whether such conditions are
going to be realized in the future is no longer probable. Therefore, non-monetary assets, liabilities and equity items including the
share capital as of December 31, 2013 and December 31, 2012 have been restated by applying the relevant conversion factors
through December 31, 2004 and carrying additions after December 31, 2004 at their nominal values.
2.2 Comparative information and restatement of prior period financial statements
Based on the decision taken on June 7, 2013 by the CMB at its meeting numbered 20/670, a new illustrative financial statement
and guidance to it has been issued effective from the interim periods ended after March 31, 2013, which is applicable for the
companies that are subject to Communiqué on the Principles of Financial Reporting in Capital Markets. Based on these new
illustrative financial statements, a number of changes were made at the Company’s financial statement and comprehensive
income table.
The reclassifications made at the Company’s financial statement of financial position as at December 31, 2012 are as follows:
• Prepaid expenses amounting to TL 1.834.083 is reclassified from other current assets to prepaid expenses as a separate line in
balance sheet,
• Deferred revenues amounting to TL 1.595.339 and TL 5.644.080 is reclassified to deferred revenues-current and deferred
revenues-non-current as separate lines in balance sheet from other short-term liabilities and other long-term liabilities
respectively,
• Due to personnel amounting to TL 8.828.874 is reclassified from other short-term liabilities to employee benefit obligations,
• Social security premiums payable amounting to TL 3.152.862 and taxes and funds payable amounting to 5.184.229 is
reclassified from other short-term liabilities to employee benefit obligations,
• Short-term portion of long-term financial liabilities amounting to TL 2.028.308 is reclassified from short-term financial liabilities
to short-term portion of long-term financial liabilities as a separate line in balance sheet,
• Advances given amounting to TL 131.619.702 is reclassified from other current assets to prepaid expenses,
• Advances taken amounting to TL 145.260.185 is reclassified from other payables to deferred revenues as a separate line in
balance sheet.
• The reclassifications made at the Company’s income statement for the period ended December 31, 2012 are as follows:
• Income from sales of fixed assets amounting to TL 15.169 is reclassified from other operating income to income from investing
activities,
• Foreign exchange losses and foreign exchange gains amounting to TL 91.354.146 and TL 86.405.935 respectively related
to trade receivables and payables, are reclassified from financial expense and financial income accounts to other operating
expenses and operating income, respectively.
• Maturity difference income amounting to TL 13.466.940 is reclassified from financial income to other operating income.
• Foreign exchange losses and gains amounting to TL 12.260.295 and TL 20.290.361 arising from forward transactions the
Company entered against exchange risk of receivables is reclassified from financial expense and financial income accounts to
other operating expenses and operating income inline with the reclassification of foreign exchanges losses and gains arising
from trade receivables.
74
Other Information
Accounting policies that are adopted in preparation of financial statements are consistent with December 31,2012 annual
financial statements except the following policy that is changed within the framework of IAS 19, “Employee benefits”.
The following changes are made at the Company’s financial statements as of December 31,2012 prepared in accordance with
Communiqué.
TAS 19 - Within the scope of the amendments to TAS 19 - Employee benefits, actuarial gains/losses related to employee
termination benefits are recognized under equity. This practice is effective for the periods starting as of January 1, 2013 and
has been implemented retrospectively. In its statement of comprehensive income, the Company has classified the actuarial loss
amounting to TL 1.891.619 (with deferred tax impact netted off) under other comprehensive income, which was recognized
under “general administrative expense”, “cost of sales”, “selling and marketing expense”, “research and development expense”
and “deferred tax income/expense” accounts in the period ended December 31, 2012. The Company has classified the actuarial
loss amounting to TL 1.891.619, with the deferred tax impact netted off, from net income to accumulated other comprehensive
income and expense that is not subject to reclassification to income or loss in the balance sheet dated December 31, 2012.
As of December 31, 2012, vacation pay liability amounting to TL 3.313.961 presented in short term provisions has been
reclassified to long term provisions for employee benefits due to amendments in TAS 19 “Employee Benefits” which has been
effective as of 1 January 2013. According to revised TAS 19, the short term benefits provided to employees comprise the ones
which are expected to be settled wholly in twelve months after the end of the reporting period. The Company’s expectation is
not to settle the whole vacation pay liability within twelve months after the end of the reporting period, so the related vacation
pay liabilities has been reclassified as other long-term employee benefits and the necessary amendments on the previous period
financial statements has been made by the Company.
2.3 Accounting errors and changes in accounting estimates
The Company recognizes, evaluates and presents similar events and transactions consistently. Accounting errors identified are
restated retrospectively. The Company has applied the accounting policies in consistence with the prior year.
Changes in estimations are applied in the current period if related to one period. They are applied forward, in the period the
change occurred and in the future when they are related with the future periods.
2.4 Changes in accounting policies
The Company changes accounting policies when it is believed that the change will lead to better presentation of transactions
and events in the financial statements. When the intentional change can affect the prior period results, the change is applied
retrospectively as though it was already applied before. Accounting policy changes arising from the application of a new
standard are applied considering the transition principles of the related standard, if any, retrospectively or forward. If no transition
principle for the standard exists, the changes are applied retrospectively.
New standards, amendments and interpretations
The accounting policies adopted in preparation of the financial statements as at December 31, 2013 are consistent with those of
the previous financial year, except for the adoption of new and amended TFRS and TFRIC interpretations effective as of January
1, 2013. The effects of these standards and interpretations on the Company’s financial position and performance have been
disclosed in the related paragraphs.
The new standards, amendments and interpretations which are effective as at January 1, 2013 are as follows:
TFRS 7 Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities (Amendment)
The amendment requires the disclosure of the rights of the entity relating to the offsetting of the financial instruments and some
information about the related regulations (eg, collateral agreements).
New disclosures would provide users of financial statements with information that is useful in;
i) evaluating the effect or potential effect of netting arrangements on an entity’s financial position and,
ii) analyzing and comparing financial statements prepared in accordance with TFRSs and other generally accepted accounting
standards.
75
Introduction
Activities
Sustainability
New disclosures have to be provided for all the financial instruments in the balance sheet that have been offset according to TAS
32. Such disclosures are applicable to financial instruments in the balance sheet that have not been offset according to TAS 32
but are available for offsetting according to main applicable offsetting regulations or other financial instruments that are subject
to a similar agreement. The amendment affects disclosures only and did not have any impact on the financial statements of the
Company.
TAS 1 Presentation of Financial Statements (Amended) - Presentation of Items of Other Comprehensive Income
The amendments to TAS 1 change only the Companying of items presented in other comprehensive income. Items that could be
reclassified (or ‘recycled’) to profit or loss at a future point in time would be presented separately from items which will never be
reclassified. The amendment affects presentation only and did not have an impact on the financial position or performance of the
Company.
TAS 19 Employee Benefits (Amended)
Numerous changes or clarifications are made under the amended standard. Among these numerous amendments, the most
important changes are removing the corridor mechanism, for determined benefit plans recognizing actuarial gain under other
comprehensive income and making the distinction between short-term and other long-term employee benefits based on
expected timing of settlement rather than employee entitlement. Since the Company recognizes the actuarial gain and loss in the
income statement, the amendment of the standard with regards to the accounting of actuarial gain/loss impact on the financial
position or performance of the Company has been explained in Note 2.2. retrospectively. Also, based on the amendment in the
presentation of short term and long term employee benefits, vacation pay liability formerly presented in the short term provisions
has been retrospectively reclassified to long term provisions.
TAS 27 Separate Financial Statements (Amended)
As a consequential amendment to TFRS 10 and TFRS 12, the POA also amended TAS 27, which is now limited to accounting for
subsidiaries, jointly controlled entities, and associates in separate financial statements. This amendment did not have an impact
on the financial position or performance of the Company.
TAS 28 Investments in Associates and Joint Ventures (Amended)
As a consequential amendment to TFRS 11 and TFRS 12, the POA also amended TAS 28, which has been renamed as TAS 28
Investments in Associates and Joint Ventures. With these amendments; accounting of associates and joint ventures have been
made by using equity method. This amendment did not have an impact on the financial position or performance of the Company.
TFRS 10 Consolidated Financial Statements
TFRS10, TAS 27 Consolidated and Separate Financial Statements address the accounting for consolidated financial statements.
A new definition of control is introduced, which is used to determine which entities are consolidated. This is a principle based
standard and require preparers of financial statements to exercise significant judgment. This amendment did not have an impact
on the financial position or performance of the Company.
TFRS 11 Joint Arrangements
The standard describes the accounting for joint ventures and joint operations with joint control. Among other changes
introduced, under the new standard, proportionate consolidation is not permitted for joint ventures. This standard did not have
an impact on the financial position or performance of the Company.
TFRS 12 Disclosure of Interests in Other Entities
TFRS 12 requires disclosures about an entity’s interests in associates, joint ventures, subsidiaries and structured entities. This
standard is about the presentation and did not have an impact on the Company’s disclosures.
76
Other Information
TFRS 13 Fair Value Measurement
The new standard provides guidance on how to measure fair value under TFRS but does not change when an entity is required
to use fair value. It is a single source of guidance under TFRS for all fair value measurements. The new standard also brings
new disclosure requirements for fair value measurements. The new disclosures has to be made, when TFRS 13 has started to
disclosed. These disclosures have been presented in Note 29.
TFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
The Interpretation clarifies when production stripping should lead to the recognition of an asset and how that asset should be
measured, both initially and in subsequent periods. This interpretation is not applicable for the Company and did not have any
impact on the financial position or performance of the Company.
Transition Guidance (Amendments to TFRS 10, TFRS 11 and TFRS 12)
The amendments change the transition guidance to provide further relief from full retrospective application. The date of initial
application is defined as ‘the beginning of the annual reporting period in which TFRS 10 is applied for the first time’. The
assessment of whether control exists is made at ‘the date of initial application’ rather than at the beginning of the comparative
period. If the control assessment is different between TFRS 10 and TAS 27/SIC-12, retrospective adjustments should be
determined. However, if the control assessment is the same, no retrospective application is required. If more than one
comparative period is presented, additional relief is given to require only one period to be restated. For the same reasons TFRS
11 and TFRS 12 has also been amended to provide transition relief. These amendments did not have an impact on the financial
statements of the Company.
Improvements to TFRSs
Annual Improvements to TFRSs - 2009 - 2011 cycle, which contains amendments to its standards, is effective for annual
periods beginning on or after 1 January 2013. This project did not have an impact on the financial position or performance of the
Company.
TAS 1 Financial Statement Presentation:
Clarifies the difference between voluntary additional comparative information and the minimum required comparative information.
TAS 16 Property, Plant and Equipment:
Clarifies that major spare parts and servicing equipment that meet the definition of property, plant and equipment are not
inventory
TAS 32 Financial Instruments: Presentation:
Clarifies that income taxes arising from distributions to equity holders are accounted for in accordance with TAS 12 Income
Taxes. The amendment removes existing income tax requirements from TAS 32 and requires entities to apply the requirements in
TAS 12 to any income tax arising from distributions to equity holders.
TAS 34 Interim Financial Reporting:
Clarifies the requirements in TAS 34 relating to segment information for total assets and liabilities for each reportable segment.
Total assets and liabilities for a particular reportable segment need to be disclosed only when the amounts are regularly provided
to the chief operating decision maker and there has been a material change in the total amount disclosed in the entity’s previous
annual financial statements for that reportable segment.
Standards issued but not yet effective and not early adopted
Standards, interpretations and amendments to existing standards that are issued but not yet effective up to the date of issuance
of the financial statements are as follows. The Company will make the necessary changes if not indicated otherwise, which will
be affecting the financial statements and disclosures, after the new standards and interpretations become in effect.
77
Introduction
Activities
Sustainability
TAS 32 Financial Instruments: Presentation - Offsetting Financial Assets and Financial liabilities (Amended)
The amendments clarify the meaning of “currently has a legally enforceable right to set-off” and also clarify the application
of the TAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement
mechanisms that are not simultaneous. These amendments are to be retrospectively applied for annual periods beginning on or
after 1 January 2014. The Company does not expect that these amendments will have significant impact on the financial position
or performance of the Company.
TFRS 9 Financial Instruments - Classification and measurement
As amended in December 2012, the new standard is effective for annual periods beginning on or after 1 January 2015. Phase 1
of this new TFRS 9 introduces new requirements for classifying and measuring financial assets and liabilities. The amendments
made to TFRS 9 will mainly affect the classification and measurement of financial assets and measurement of fair value option
(FVO) liabilities and requires that the change in fair value of a FVO financial liability attributable to credit risk is presented under
other comprehensive income. Early adoption is permitted. The Company is in the process of assessing the impact of the
amendment on financial position or performance of the Company.
TFRIC Interpretation 21 Levies
The interpretation clarifies that an entity recognizes a liability for a levy when the activity that triggers payment, as identified
by the relevant legislation, occurs. It also clarifies that a levy liability is accrued progressively only if the activity that triggers
payment occurs over a period of time, in accordance with the relevant legislation. For a levy that is triggered upon reaching a
minimum threshold, the interpretation clarifies that no liability should be recognized before the specified minimum threshold is
reached. The interpretation is effective for annual periods beginning on or after 1 January 2014, with early application permitted.
Retrospective application of this interpretation is required. The Company does not expect that this amendment will have any
impact on the financial position or performance of the Company.
The new standards, amendments and interpretations that are issued by the International Accounting Standards Board (IASB) but
not issued by POA
The following standards, interpretations and amendments to existing IFRS standards are issued by the IASB but not yet effective
up to the date of issuance of the financial statements. However, these standards, interpretations and amendments to existing
IFRS standards are not yet adapted/issued to TFRS by the POA, thus they do not constitute part of TFRS. The Company will
make the necessary changes to its financial statements after the new standards and interpretations are issued and become
effective under TFRS.
IFRS 10 Consolidated Financial Statements (Amendment)
IFRS 10 is amended to provide an exception to the consolidation requirement for entities that meet the definition of an
investment entity. The exception to consolidation requires investment entities to account for subsidiaries at fair value through
profit or loss in accordance with IFRS 9. The Company does not expect that this amendment will have any impact on the
financial position or performance of the Company.
IAS 36 Impairment of Assets - Recoverable Amount Disclosures for Non-Financial assets (Amendment)
The IASB, as a consequential amendment to IFRS 13 Fair Value Measurement, modified some of the disclosure requirements in
IAS 36 Impairment of Assets regarding measurement of the recoverable amount of impaired assets. The amendments required
additional disclosures about the measurement of impaired assets (or a Company of assets) with a recoverable amount based
on fair value less costs of disposal. The amendments are to be applied retrospectively for annual periods beginning on or after 1
January 2014. Implementation of the IFRS13, enable to use earlier. The Company does not expect that this amendment will have
any impact on the financial position or performance of the Company.
78
Other Information
IAS 39 Financial Instruments: Recognition and Measurement - Novation of Derivatives and Continuation of Hedge Accounting
(Amendment)
In June 2013, the IASB issued amendments to IAS 39 Financial Instruments: Recognition and Measurement that provides a
narrow exception to the requirement for the discontinuation of hedge accounting in circumstances when a hedging instrument
is required to be novated to a central counterparty as a result of laws or regulations. The amendments are to be applied
retrospectively for annual periods beginning on or after 1 January 2014.The Company does not expect that this amendment will
have any impact on the financial position or performance of the Company.
IFRS 9 Financial Instruments - Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39 -IFRS 9 (2013)
In November 2013, the IASB issued a new version of IFRS 9, which includes the new hedge accounting requirements and some
related amendments to IAS 39 and IFRS 7. Entities may make an accounting policy choice to continue to apply the hedge
accounting requirements of IAS 39 for all of their hedging transactions. The standard does not have a mandatory effective
date, but it is still available for application; a new mandatory effective date will be set when the IASB completes the impairment
phase of its project on the accounting for financial instruments. The Company is in the process of assessing the impact of the
amendment on financial position or performance of the Company.
Improvements to IFRSs
In December 2013, the IASB issued two cycles of Annual Improvements to IFRSs - 2010-2012 Cycle and IFRSs - 2011-2013
Cycle. Other than the amendments that only affect the standards’ Basis for Conclusions, the changes are effective as of 1 July
2014. Earlier application is permitted.
Annual Improvements to IFRSs - 2010-2012 Cycle
IFRS 2 Share-based Payment:
Definitions relating to vesting conditions have changed and performance condition and service condition are defined in order to
clarify various issues. The amendment is effective prospectively.
IFRS 3 Business Combinations
Contingent consideration in a business acquisition that is not classified as equity is subsequently measured at fair value through
profit or loss whether or not it falls within the scope of IFRS 9 Financial Instruments. The amendment is effective for business
combinations prospectively.
IFRS 8 Operating Segments
The changes are as follows: i) Operating segments may be combined/aggregated if they are consistent with the core principle
of the standard. ii) The reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is
reported to the chief operating decision maker. The amendments are effective retrospectively.
IFRS 13 Fair Value Measurement Decision Requirements
As clarified in the Basis for Conclusions, short-term receivables and payables with no stated interest rates can be held at invoice
amounts when the effect of discounting is immaterial. The amendment is effective immediately.
IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets
The amendment to IAS 16.35(a) and IAS 38.80(a) clarifies that revaluation can be performed, as follows:
i) Adjust the gross carrying amount of the asset to market value or ii) determine the market value of the carrying amount and
adjust the gross carrying amount proportionately so that the carrying amount equals to the market value. The amendment is
effective retrospectively.
IAS 24 Related Party Disclosures
The amendment clarifies that a management entity - an entity that provides key management personnel services - is a related
party subject to the related party disclosures. The amendment is effective retrospectively.
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Annual Improvements to IFRSs - 2011-2013 Cycle
IFRS 3 Business Combinations
The amendment clarifies that: i) Joint arrangements are outside the scope of IFRS 3, not just joint ventures ii) The scope
exception applies only to the accounting in the financial statements of the joint arrangement itself. The amendment is effective
prospectively.
IFRS 13 Fair Value Measurement
The portfolio exception in IFRS 13 can be applied to the contracts not just financial assets and financial liabilities. The
amendment is effective prospectively.
IAS 40 Investment Property
The amendment clarifies the interrelationship of IFRS 3 and IAS 40 when classifying property as investment property or owneroccupied property. The amendment is effective prospectively.
Company does not expect that these amendments will have any impact on the financial position or performance of the
Company.
FRS 14 - interim standard on regulatory deferral accounts.
In January 2014, the IASB issued this standard. IFRS 14 permits first-time adopter rate regulated entities to continue to
recognise amounts related to rate regulation in accordance with their previous GAAP requirements when they adopt IFRS.
Existing IFRS preparers are prohibited from adopting this Standard. The Standard will be applied on a full retrospective basis
and is effective for annual periods beginning on or after 1 January 2016. Earlier application is permitted. The Standard is not
applicable for the Company and will not have an impact on the financial position or performance of the Company.
Resolutions promulgated by the Public Oversight Authority
In addition to those mentioned above, the POA has promulgated the following resolutions regarding the implementation of
Turkish Accounting Standards. “The financial statement examples and user guide” became immediately effective at its date of
issuance; however, the other resolutions shall become effective for the annual reporting periods beginning after 31 December
2012.
2013-1 Financial Statement Examples and User Guide
The POA promulgated “financial statement examples and user guide” on May 20, 2013 in order to ensure the uniformity of
financial statements and facilitate their audit. The financial statement examples within this framework were published to serve
as an example to financial statements to be prepared by companies obliged to apply Turkish Accounting Standards, excluding
financial institutions established to engage in banking, insurance, private pensions or capital market. The Company has made the
classification stated in Note 2.2 in order to comply with the requirements of this regulation.
2013-2 Accounting of Combinations under Common Control
In accordance with the resolution it has been decided that i) combination of entities under common control should be recognized
using the pooling of interest method, ii) and thus, goodwill should not be included in the financial statements and iii) while
using the pooling of interest method, the financial statements should be prepared as if the combination has taken place as of
the beginning of the reporting period in which the common control occurs and should be presented comparatively from the
beginning of the reporting period in which the common control occurred. This resolution did not have any impact on the financial
statements of the Company.
2013-3 Accounting of Redeemed Share Certificates
Clarification has been provided on the conditions and circumstances when the redeemed share certificates shall be recognized
as a financial liability or equity based financial instruments. This resolution did not have any impact on the financial statements of
the Company.
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2013-4 Accounting of Cross Shareholding Investments
If a subsidiary of an entity holds shares of the entity then this is defined as cross shareholding investment. Accounting of this
cross investment is assessed based on the type of the investment and different recognition principles adopted accordingly. With
this resolution, this topic has been assessed under three main headings below and the recognition principles for each one of
them has been determined.
i) the subsidiary holding the equity based financial instruments of the parent,
ii) the associates or joint ventures holding the equity based financial instruments of the parent
iii) the parent’s equity based financial instruments are held by an entity, which is accounted as an investment within the scope of
TAS 39 and TFRS 9 by the parent.
This resolution did not have any impact on the financial statements of the Company.
2.5 Significant accounting judgments and estimates
The preparation of the financial statements require management to make estimates and assumptions that affect certain reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting year. Actual results could differ from those estimates. Those
estimates are reviewed periodically, and as adjustments become necessary, they are reported in earnings in the periods in which
they become known.
Significant estimates used in the preparation of these financial statements and the significant judgments with the most significant
effect on amounts recognized in the financial statements are as follows:
a) In the context of IAS 11 “Construction contracts” assumptions are made related to total cost of and profitability of projects.
b) Deferred tax asset is recognised to the extent that taxable profit will be available against which the deductible temporary
differences can be utilized. When taxable profit is probable, deferred tax asset is recognised for all deductable temporary
differences. For the year ended December 31, 2013, since the Management believed the -indicators demonstrating that the
Company will have taxable profits in the foreseeable future- are reliable, deferred tax asset has been recognized.
c) Reserve for retirement pay is determined by using actuarial assumptions (discount rates, future salary increases and employee
turnover rates).
d) The Company determines warranty provision by considering the past warranty expenses and remaining warranty period per
vehicle.
e) Provision for doubtful receivables is an estimated amount that management believes to reflect for possible future losses on
existing receivables that have collection risk due to current economic conditions. During the impairment test for the receivables,
the debtors, other than related parties, are assessed with their prior year performances, their credit risk in the current market, and
their individual performances after the balance sheet date up to the issuing date of the financial statements and furthermore, the
renegotiation conditions with these debtors are considered.
f) Inventory price lists after discount is used to calculate impairment for inventories. In such cases that sales price cannot be
predicted, inventory aging and physical status are considered together with technical personnel’s opinion. If anticipated expected
net realizable value is less than the cost, impairment for the difference is provided for.
g) When allocating provision for legal risks, the probabilities of failure in the cases and the possible liabilities to be arisen in the
case of failure are evaluated by the management through being counseled by legal advisors of the Company. The management
determines the amount of the provisions based on their best estimates.
h) The Company has made certain important assumptions based on experiences of technical personnel in determining useful
economic life of mainly related to tangible and intangible assets
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2.6 Summary of significant accounting policies
Revenue recognition
Accruals basis accounting is applied for the recognition of revenue and expenses. The accrual concept requires that revenue,
income and profits should be matched with costs, expenses and losses belonging to the same period.
Revenue includes invoiced or accrued values of sale of goods and rendering services. Revenue from the sale of goods is
recognised on an accrual basis over fair value when the significant risks and rewards of ownership of the goods have passed to
the buyer, usually on delivery of the goods. Revenue is recognized to the extent that it is probable that the economic benefits will
flow to the Company and the revenue can be measured reliably. Significant risk and rewards related to sales passes to the buyer
on delivery of the goods or transfer of ownership to buyer. Net sales are invoiced amounts of delivered goods excluding sales
returns.
Service revenue is recognized in the period services given. Service revenue in the context of repair maintenance agreements
for more than one year are recognized in equal installments (straight line method) during the agreement periods and amounts
belonging to the following periods are booked as deferred revenue.
When the arrangement effectively constitutes a financing transaction, the fair value of the consideration is determined by
discounting all future receipts using an imputed rate of interest. The difference between the fair value and the nominal amount of
the consideration is recognized on an accrual basis as financial income.
Interest income is recognised using the effective interest rate until maturity and considering the effective interest rate.
Construction contract activities
Contract revenue and costs are recognized as revenue and expenses, respectively, when the outcome of a construction contract
can be estimated reliably. The projects are “fixed cost” and the project revenues are reflected according to the percentage of
completion method. The percentage of completion method is used to recognize revenue on a contract as work progresses by
matching contract revenue with contract costs incurred based on the proportion of work completed which is determined by the
ratio of actual costs incurred through to the end of each reporting period divided by the total estimated contract costs of the
project.
Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as
indirect labor, supplies, tools, repairs and depreciation costs. Selling, general and administrative expenses are charged to the
income statement as incurred. Provisions for estimated losses on uncompleted contracts are made in full, in the period in which
such losses are determined. Changes in job performance, job conditions and estimated profitability, including those arising from
contract penalty provisions and final contract settlements may result in revisions to costs and income and are recognized in the
period in which the revisions are determined.
Costs and estimated earnings in excess of billings on uncompleted contracts represent revenues recognized in excess of
amounts billed. Billings in excess of costs and estimated earnings on uncompleted contracts represent billings in excess of
revenues recognized (Note 11).
Related parties
Parties are considered related to the Company if;
(a) A person or a close member of that person’s family is related to a reporting entity if that person:
(i) has control or joint control over the reporting entity;
(ii) has significant influence over the reporting entity; or
(iii) is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.
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(b) The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow
subsidiary is related to the others).
(i) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which
the other entity is a member).
(ii) Both entities are joint ventures of the same third party.
(iii) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(iv) The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to
the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity.
(v) The entity is controlled or jointly controlled by a person identified in (a).
(vi) A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the
entity (or of a parent of the entity).
Inventories
Inventories are valued at the lower of cost or net realizable value. Cost incurred in bringing each product to its present location
and conditions are included in the cost of inventory:
Raw materials and merchandises - cost is determined on a weighted average basis over the costs net of imputed interest.
Finished goods and work-in progress -cost of direct materials and labor and a proportion of manufacturing overheads is included
based on normal operating capacity using average cost method.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale (Note 10).
All property and equipment is initially recorded at cost and then are carried at restated cost until December 31, 2004 with the
index of the related purchase date. Property, plant and equipment are stated at historical cost less accumulated depreciation and
accumulated impairment loss.
The initial cost of property and equipment comprises its purchase price, including import duties and non-refundable purchase
taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use.
Expenditures incurred after property, plant and equipment have been put into operation, such as repairs and maintenance,
are normally charged to income in the year the costs are incurred. In situations where it can be clearly demonstrated that the
expenditures have resulted in an increase in the future economic benefits expected to be obtained from the use of an item
of property and equipment beyond its originally assessed standard of performance, the expenditures are capitalized as an
additional cost of property and equipment.
The useful lives and depreciation methods are reviewed periodically to ensure that the method and period of depreciation are
consistent with the expected pattern of economic benefits from items of property, plant and equipment.
Depreciation is provided on cost or revalued amount of property, plant and equipment on a straight line basis. Estimated useful
lives are as follows:
Land improvements
Building
Machinery and equipment
Vehicles
Furniture and fixtures
Leasehold improvements
25-30 years
30 years
3-15 years
9 years
5-15 years
5 years
Land is not amortized since it has an unlimited economic life.
Gains and losses on sale of property, plant and equipment are included in investment activity income and expense.
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Intangible assets
Intangible assets mainly comprise software rights, information systems, project costs related to new product development and
computer software. Intangible assets are initially stated at cost and are restated until December 31, 2004 with the index of the
related purchase date. Intangible assets are stated at cost less accumulated depreciation and accumulated impairment loss.
Intangible assets are amortized on a straight-line basis over the estimate of their useful lives, which is up to 5 years. Intangible
assets are recognized if it is probable that the future economic benefits that are attributable to the asset will flow to the
enterprise; and the cost of the asset can be measured reliably. Where the carrying amount of an intangible asset is greater than
its estimated recoverable amount, it is written down immediately to its recoverable amount.
Research and development expenses
Research expenditures are recognized as an expense when they are incurred.
Intangible assets arising from in-house development activities (or the improvement phase of an intergroup project) are recognized
when all of the following conditions are met:
(a) existence of the technical feasibility of completing the intangible asset so that it will be available for use or sale.
(b) existence of the intention to complete the intangible asset and use or sell it
(c) existence of the ability to use or sell the intangible asset.
(d) reliability of how the intangible asset will generate probable future economic benefits
(e) the availability of adequate technical, financial and other resources to complete the development and to use or sell the
intangible asset.
(f) existence of the ability to measure reliably the expenditure attributable to the intangible asset during its development.
Other development expenditures are recognized as an expense as incurred. Development costs previously recognized as an
expense are not capitalized as an asset in a subsequent period. Capitalized development expenses are amortized in expected
useful life which is 5 years by straight-line method effective from the start of the production.
Investment, research and development incentives
Government grants are recognized where there is reasonable assurance that the grant will be received and all attaching
conditions will be complied with. When the grant relates to an expense item, it is recognized as income over the period
necessary to match the grant on a systemic basis to the costs that it is intended to compensate. Where the grant relates to an
asset, it is recorded as deferred income.
Investment and research and development incentives are recognized when the Company’s incentive requests (applications) are
approved by fiscal authorities.
Income taxes
Income tax is the aggregate amount included in the determination of net profit or loss for the year in respect of current and
deferred tax.
The current income tax charge is calculated in accordance with the tax laws enacted or substantively enacted at the balance sheet
date in Turkey. Under the Turkish Tax Code, companies having head office or place of business in Turkey are subject to corporate
tax.
A provisional tax accrual is recognized in the financial statements for current taxation. Current tax charge is calculated over
operational results considering the effects of disallowable and exemptions.
Furthermore, provisional corporate taxes are paid at 20% over profits declared for interim periods in order to be deducted from
the final corporate tax.
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Under the Turkish taxation system, tax losses can be carried forward to be offset against future taxable income for five years. Tax
losses cannot retrospectively offset against the profits of previous years.
Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between
the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax assets
and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is
settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
Deferred income tax assets are recognised for all deductible temporary differences and unused tax losses, to the extent that it
is probable that taxable profit will be available against which the deductible temporary differences can be utilized. The carrying
amount of deferred income tax assets is reviewed by the Company at each balance sheet date and reduced to the extent that
it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be
utilized.
Deferred tax assets are presented net of deferred tax liabilities in the balance sheet.
Long-term employee benefits
(a) Defined benefit plans:
Retirement pay liability
In accordance with existing social legislation in Turkey, the Company is required to make lump-sum termination indemnities to
each employee who has completed over one year of service with the Company and whose employment is terminated due to
retirement or for reasons other than resignation or misconduct.
In the financial statements, the Company has recognized a liability using the “Projected Unit Credit Method” based upon factors
derived using the Company’s experience of personnel terminating and being eligible to receive benefits, discounted by using
the current market yield at the balance sheet date on government bonds. All actuarial gains and losses are recognized in the
comprehensive income statement.
(b) Defined contribution plans:
The Company pays contributions to the Social Security Institution on a mandatory basis. The Company has no further payment
obligations once the contributions have been paid. The contributions are recognized as an employee benefit expense when they
are due.
Foreign currency transactions
Transactions in foreign currencies during the year have been translated at the exchange rates prevailing at the dates of such
transactions. Monetary balance sheet items denominated in foreign currencies have been translated at the Central Bank of
Turkey (TCB) exchange rates prevailing at the balance sheet date.
Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the
liability. Provisions are revised at each balance sheet date and amended in order to reflect management’s recent estimations.
Contingent liabilities and assets
Assets and liabilities that originate from past incidents and whose presence is not fully under the entity’s control as it can only be
confirmed through the realization of one or more indefinite incidents to take place in the future are not included in the financial
statements and are considered as contingent liabilities and assets.
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Contingent liabilities and assets are defined to be arising from past events to be caused from inflows or outflows of resources
including economic benefits on amortization.
Contingent liabilities are not recognized in the financial statements. They are disclosed only, if the probability of outflow of resources
embodying economic benefits is not highly probable. A contingent asset is not recognized in the financial statements but disclosed
when an inflow of economic benefits is mostly probable.
Share capital and dividend
Ordinary shares are classified under share capital. Dividend distribution on ordinary shares is recognized as an appropriation of
profit in the period in which they are declared.
Operating leases
Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of
the lease.
Warranty expenses
Warranty expenses are recorded as a result of repair and maintenance expenses for products produced and sold, authorized
services’ labor and material costs for products under the scope of the warranty terms without any charge to the customers, initial
maintenance costs and estimated costs based on statistical information for possible future warranty services and returns of
products with respect to the products sold during the year.
Financial instruments
The Company’s financial assets comprise cash and cash equivalents, receivables from related parties, financial investments and
other receivables. Financial liabilities comprise financial loans, trade payables, due to related parties and other payables.
Financial assets with fixed or determinable payments and fixed maturities are classified as held to maturity when the Company
has the positive intention and ability to hold to maturity. Financial assets which are ready for sale when considered the liquidity
needs or the possible changes in interest rates, are classified as held for trading. Others except these are classified as ready for sale
financial assets.
Available for sale investments
Investments intended to be held for an indefinite period of time and which may be sold in response to needs for liquidity or
changes in interest rates are classified as available-for-sale. These are included in non-current assets unless management has
the expressed intention of holding the investments for less than 12 months from the balance sheet date or unless they will need
to be sold to raise operating capital, in which case they are included in current assets. Management reviews the classification of
these financial assets on a regular basis.
The fair value of financial assets must be carried at cost less impairment, when the fair value of financial assets cannot be
measured reliably.
Available for sale assets are carried at fair value after initial recognition. The fair value of available for sale financial assets is
determined by the market price at the balance sheet date when available. If no market price is available, fair value is estimated
based on valuation process by using discounted cash flow, similar purchases and observable market parameters.
Cash and cash equivalents comprise cash on hand and at banks and short-term highly liquid and the risk of value change is not
material investments including time deposits generally having original maturities of three months or less.
Bank accounts consist of time and demand deposit accounts and the related interest accrued. The Turkish Lira balances are
stated at face values and the foreign currency balances are translated into Turkish Lira at the foreign currency rate issued by the
Central Bank as at the report date. Time deposit accounts are stated as calculated by adding accrued interest as of balance
sheet date on the principle amount.
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Trade receivables
Trade receivables and notes and post-dated checks classified within trade receivables which are recognized at original invoice
amount are measured at amortized cost using the effective interest rate method. Short term trade receivables without specified
interest rate, are measured at invoice amount when the interest accrual effect is immaterial.
A credit risk provision for trade receivables is established if there is objective evidence that the Company will not be able to
collect all amounts due. The allowance is an estimated amount which is difference between existing receivable and collectible
amount. Collectible amount is the discounted value of trade receivables, all cash flows including collections from guarantees by
using original effective interest rate.
Post dated cheques received with maturity dates exceeding the balance sheet date are classified in trade receivables and are
rediscounted using the interest rates determined for government debt securities by considering the interest levels arising in the
stock exchanges or other organized markets.
A credit risk provision for trade receivables is established if there is objective evidence that the Company will not be able to
collect all such receivables. The allowance for doubtful receivables is established through a provision charged to expenses.
Provision is made when there is objective evidence that the Company will not be able to collect the debts. The allowance is an
estimated amount that management believes to be adequate to absorb possible future losses on existing receivables that may
become uncollectible due to current economic conditions and inherent risks in the receivables. Bad debts are written off when
identified. Provision for doubtful receivables is recognized as an expense when identified.
If a portion or the entire amount of a receivable is collected after provided for a provision, the collected amount is deducted from
total provision and is recognized as an income in the comprehensive income statement.
Trade payables
Trade payables are recognized initially at fair value of and subsequently measured at amortized cost using the effective interest
method.
Borrowings
Short and long term bank loans are stated at the value computed through addition of the principal amount and the interest
expenses accrued as of the balance sheet date.
Borrowings are recognized initially at proceeds received, net of transaction costs incurred. Borrowings are subsequently stated
at amortized cost using the effective yield method; any difference between the proceeds and redemption value is recognized in
the comprehensive income statement over the period of the borrowings. Borrowing costs arising from bank loans are charged to
the comprehensive income statement when they are incurred unless they are incurred for acquisition of a qualifying asset.
Derivative financial instruments are initially recognised in the balance sheet at cost and subsequently are re-measured at their fair
value. The derivative instruments of the Company mainly consist of foreign exchange forward contracts and related transactions.
These derivative transactions, even though providing effective economic hedges under the Company risk management position,
do not generally qualify for hedge accounting, therefore treated as ‘derivative financial instruments held for trading. Any gains
or losses arising from changes in the fair value of such kind of financial instruments are recognized under comprehensive income
statement.
Impairments in financial assets
Financial asset are assessed at each balance sheet date whether there is any objective evidence that a financial asset or a group
of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is
objective evidence of impairment as a result of one or more events that had occurred after the initial recognition of the asset and
that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can
be reliably estimated. For loans and receivables impairment loss has been incurred the amount of the loss is measured as the
difference between the asset’s carrying amount and the present value of estimated future cash flows.
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Except for trade receivables, which is reduced through the use of an allowance account, impairment on all other financial assets
are directly written off in the related account. In case trade receivables cannot be collected, the related amount is written off from
allowance account. The change in allowance account is accounted in the comprehensive income statement.
An impairment loss recognized in prior periods for an asset is reversed if the subsequent increase in the asset’s recoverable
amount is caused by a specific event since the last impairment loss was recognized. Such a reversal amount cannot be higher
than the previously recognized impairment and is recognized as income in the financial statements.
Recognition and derecognition of financial assets and liabilities
The Company recognizes a financial asset or financial liability in its balance sheet when only when it becomes a party to the
contractual provisions of the instrument. The Company derecognizes a financial asset or a portion of it only when the control on
rights under the contract is discharged. The Company derecognizes a financial liability when the obligation under the liability is
discharged or cancelled or expires.
All regular way financial asset purchase and sales are recognized at the date of the transaction, the date the Company
committed to purchase or sell. The mentioned purchases or sales are ones which require the delivery of the financial assets
within the time interval identified with the established practices and regulations in the market.
Foreign currency transactions
Monetary balance sheet items denominated in foreign currencies have been translated at the Central Bank of Turkey exchange
rates prevailing at the balance sheet date. Exchange gains or losses arising on translation of foreign currency denominated
assets and liabilities are included in the comprehensive income statement.
Earnings per share
Basic earnings per share are calculated by dividing the net profit by the weighted average number of ordinary shares outstanding
during the year.
The companies can increase their share capital by making a pro-rata distribution of shares (“Bonus Shares”) to existing
shareholders without consideration for amounts resolved to be transferred to share capital from retained earnings and share
capital inflation adjustments. For the purpose of the earnings per share calculation such Bonus Share issues are regarded as
stock dividends. Accordingly, the weighted average number of shares used in earnings per share calculation is derived by giving
retroactive effect to the issue of such shares.
Subsequent events
Subsequent events comprise all events occurred between the date of authorization of the financial statements for issuance and
the balance sheet date.
The Company updates its financial statements and respective disclosures that relate to conditions that existed at the end of the
reporting period to regarding any new information that they receive after the reporting period which require amendment. Nonadjusting events are solely disclosed if they are of such importance.
Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication that carrying value of assets except financial
assets and deferred tax assets is impaired or not. When an indicator of impairment exists, the Company estimates the
recoverable values of such assets. When individual recoverable value of assets cannot be measured, recoverable value of cash
generating unit of that asset is measured.
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its
recoverable amount. Recoverable amount is the higher of net selling price or value in use. Net selling price is determined by
deducting any expenses to be incurred for the sale of an asset from the fair value of the asset. Value in use is calculated as the
discounted value of the estimated future cash flows the entity expects to receive from the asset.
When recoverable amount of an asset (or a cash generating unit) is lower than its carrying value, the asset’s carrying value is
reduced to its recoverable amount. An impairment loss is recognized immediately in the comprehensive income statement.
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An impairment loss recognized in prior periods for an asset is reversed if the subsequent increase in the asset’s recoverable
amount is caused by a specific event since the last impairment loss was recognized. Such a reversal amount cannot be higher
than the previously recognized impairment and is recognized as income in the financial statements.
Borrowing costs
Borrowing costs comprise interest expense, foreign exchange losses arising from financing activities and other costs related with
financing.
Borrowing costs directly attributable to the acquisition of qualifying assets are capitalised as part of the cost of the respective
assets. Capitalization is ceased when the -operations to bring the qualifying asset ready for sale or use- are completed.
Qualifying assets are those assets whose construction or production takes a substantial period of time to get ready for its
intended use or sale.
All other borrowing costs are expensed in the period they occur. The Company did not capitalize any borrowing cost in the
current year.
Offsetting
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable
right to set off the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the
liabilities simultaneously.
3. Segment reporting
Financial statements of the Otokar Europe SAS have not been consolidated to financial statements of the Otokar Otomotiv ve
Savunma Sanayi Anonim Şirketi since the operations of the Otokar Europe SAS company have not had significant effect on the
financial statements of the Otokar Otomotiv ve Savunma Sanayi Anonim Şirketi as specified in Note 5 and has been presented
at historical cost. As a consequence of this, the Company follows its operations in one segment, does not have different
geographical and operational segments and the Company does not prepare segment reporting.
4. Cash and cash equivalents
Cash at banks
- Demand deposits
- Time deposits
Cheques and notes received
Other
December 31, 2013
December 31, 2012
1.921.397
4.071.425
2.862.136
29.216
4.217.628
39.615.000
4.026.574
47.043
8.884.174
47.906.245
As of December 31, 2013, effective interest rate of time deposits which are total amounting to TL 4.071.425 is annually 4,21%
and the maturity is 2 days. TL 1.321.425 of this amount is foreign currency.(As of December 31, 2012, effective interest rate of
time deposits which are originally amounting to TL 39.615.000 is annually 8% and the maturity is 1 day.)
Checks and notes received consist of checks and notes which are due as of balance sheet date and are given to banks for
collections.
As of December 31, 2013, the Company has restricted bank deposit amounting to TL 862 (December 31, 2012 - TL 1.362).
5. Financial investments
The Company has a subsidiary named “Otokar Europe SAS” with paid in capital of Euro 100.000(TL 239.280), established on
August 18, 2011, in France for the purpose of organizing export activities and increasing export sales. Since “Otokar Europe
SAS” operations does not materially affect the financial statements, it has not been subject to consolidation and has been
presented at historical cost value.
89
Introduction
Activities
Sustainability
6. Financial liabilities
December 31, 2013
Maturities
Interest rate (%)
TL
Short-term bank borrowings (*)
Denominated in TL
Denominated in Euro
January 2, 2014 - July 25, 2014
11,36
32.048.744
January 2, 2014
2,59-2,64
106.228.231
January 26, 2015 - June 3, 2016
8,36-11,90
2.326.037
February 9, 2015
2,04
360.760
Payments of the long-term bank borrowings
and interest accruals
Denominated in TL
Denominated in Euro
Total
140.963.772
December 31, 2013
Maturities
Interest rate (%)
TL
Long-term bank borrowings (*)(**)
Denominated in TL
Denominated in Euro
January 26, 2015 - June 3, 2016
8,36-11,90
288.000.000
February 9,2015
2,04
44.047.500
Total
(*)
332.047.500
Bearing fixed interest rate
Weighted average maturity days of long-term borrowings are 696.
(**)
December 31, 2012
Maturities
Interest rate (%)
TL
Short-term bank borrowings (***)
Denominated in TL
January 2, 2013 - January 3, 2013
-
2.028.308
January 7, 2013- June 14, 2013
8,72 - 11,81
48.064.941
Payments of the long-term bank borrowings
and interest accruals
Denominated in TL
Total
90
50.093.249
Other Information
December 31, 2012
Maturities
Interest rate (%)
TL
Long-term bank borrowings (*) (**)
Denominated in TL
March 26, 2014 - March 14, 2016
8,72 - 11,81
Total
236.099.752
236.099.752
Weighted average maturity days of long-term borrowings are 828.
(**)
Bearing fixed interest rate
(***)
Interest free credit for the SSI payment.
(*)
As of December 31, 2013, the Company has not provided any guarantees for the borrowings received (December 31, 2012 None).
7. Derivative financial instruments
Derivative financial instruments consist of the forward contracts which are entered into, to hedge foreign currency risk arising
from Company’s foreign currency sales.
Fair values
Contract amount
Contract maturity
Liabilities
December 31, 2013:
Forward transactions
170.169.265
January 9, 2014 - February 13, 2014
(1.231.950)
Short-term derivative financial instruments
170.169.265
(1.231.950)
Total derivative financial instruments
170.169.265
(1.231.950)
December 31, 2012:
Forward transactions
213.421.206 January 31, 2013 - February 28, 2013
(2.193.011)
Short-term derivative financial instruments
213.421.206
(2.193.011)
Total derivative financial instruments
213.421.206
(2.193.011)
91
Introduction
Activities
Sustainability
8. Trade receivables and payables
Trade receivables
December 31, 2013
December 31, 2012
247.876.807
101.931.133
100.905.085
118.985.948
349.807.940
219.891.033
Less: provision for doubtful receivables
(21.961.122)
(19.747.448)
Other short-term trade receivables
327.846.818
200.143.585
71.374.049
24.550.065
Short-term trade receivables
399.220.867
224.693.650
Long-term trade receivables, net
Long-term notes receivable, net
178.669.298
14.269.026
13.255.966
46.141.537
Long-term trade receivables
192.938.324
59.397.503
Trade receivables, net
Notes receivables, net
Trade receivables from related parties (Note 27)
As of December 31, 2013, average collection term for trade receivables (except notes receivables) is 60-90 days (December 31,
2012 - 60-90 days).
Guarantees received for trade receivables
Receivables of the Company mainly relate to the sales to the minibus and bus dealers, trailer sales and military vehicle sales. As
of December 31, 2013, the total trade receivable from dealers amounting to TL 47.451.597 (December 31, 2012 - TL 32.065.161),
after provision reserved for doubtful receivables, has been secured by mortgages and guarantees at the amount of TL
115.753.500 (December 31, 2012 - TL 32.065.161). The Company manages its credit risk for the remaining receivables through
policies and procedures as explained in the Credit Risk section of Note 28.
92
Other Information
The aging of the past due but not impaired receivables is as follows:
December 31, 2013
Trade receivables
1- 30 day past due
1- 3 month past due
3- 12 month past due
1- 5 year past due (*)
Over 5 year past due
Total
275.818
275.818
Amount secured with guarantee (1)
275.818
(*)
Legal follow up has been started for the trade receivable balances which are overdue for 1-5 years.
December 31, 2012
Trade receivables
1- 30 day past due
1- 3 month past due
3- 12 month past due
1- 5 year past due
Over 5 year past due
Total
63.597
1.229.836
1.293.433
Amount secured with guarantee (1)
1.253.810
(1)
Pledges on trailers.
The movement of the provision for doubtful receivables for the year ended December 31, 2013 and December 31, 2012 are as
follows:
December, 31 2013
December, 31 2012
January 1
Collections (Note 22)
19.747.448
(95.414)
2.309.088
18.337.536
(1.326.573)
2.736.485
As of December 31
21.961.122
19.747.448
December, 31 2013
December, 31 2012
Trade payables, net
Notes payables, net
89.077.102
202.870
75.851.383
186.300
Short-term trade payables
89.279.972
76.037.683
Trade payables to related parties (Note 27)
13.154.537
8.988.915
102.434.509
85.026.598
Trade payables
Short-term trade payables
As of December 31, 2013, average payment term for trade payables is 45-60 days (December 31, 2012 - 45-60 days).
93
Introduction
Activities
Sustainability
9. Other receivables and payables
Other short-term receivables
December 31, 2013
December,31 2012
Due from personnel
2.524
1.715
Total
2.524
1.715
December 31, 2013
December,31 2012
Deposits and guarantees given
58.112
47.971
Total
58.112
47.971
December 31, 2013
December,31 2012
Other miscellaneous payables
10.819.100
1.441.022
Total
10.819.100
1.441.022
December 31, 2013
December 31, 2012
Raw material
Work-in-process
Finished goods
Merchandise
Goods in transit
(*)
Impairment for inventories (-)
126.204.804
3.974.688
42.478.530
43.191.637
83.251.978
(1.304.472)
103.285.960
22.257.093
49.091.664
30.152.329
49.461.629
(1.615.688)
Total
297.797.165
252.632.987
Other long-term receivables
Other short-term payables
10. Inventories
TL 1.049.500 of impairment is related to finished goods (December 31, 2012 - 1.394.900) and TL 254.972 is related to merchandises (December 31, 2012 - 220.788).
The impairment has been accounted under cost of sales account.
(*)
The movements of impairment for inventories in 2013 are as follows:
January 1, 2013
Provision no longer required (Note 21)
December 31, 2013
94
December 31, 2013
December 31, 2012
(1.615.688)
311.216
(1.575.452)
(40.236)
(1.304.472)
(1.615.688)
Other Information
11. Costs and billings on uncompleted contracts and other payables
Receivable from Costs and estimated earnings in excess of billings on uncompleted contracts is amounting to TL 93.597.289 as
of December 31, 2013 (December 31, 2012 - TL 61.325.046) after netting with short term advance taken.
As of December 31, 2013, the short term advances taken by the Company related with ongoing projects which amounts to TL
232.113.373 was included in deferred revenues in the financial statements (December 31, 2012 - TL 93.823.684). Rest of the
amount TL 36.402.368 which is included in deferred income is composed of other advance taken from customer (December 31,
2012 - TL 51.436.501) and other payables as amounting to TL 37.810.773 (December 31, 2012 - TL 1.595.339).
12. Property, plant and equipment
For the year ended December 31, 2013, the movement of property, plant and equipment and the accumulated depreciation is as
follows:
Cost:
Land
Land improvements
Buildings
Machinery, equipment and installations
Motor vehicles
Construction in progress
Accumulated depreciation:
Land improvements
Buildings
Motor vehicles
Net book value
January 1, 2013
Additions
Disposals
Transfers December 31, 2013
37.456.746
10.068.228
59.598.896
108.789.029
8.703.831
27.791.048
1.737.346
867.007
12.806
2.626.070
1.506.517
3.408.838
180.642
6.273.619
(434.628)
(2.253.154)
(308.248)
-
1.228.317
571.772
963.084
869.986
816.597
(5.362.305)
37.456.746
11.309.351
60.170.668
111.943.555
7.957.194
31.761.624
2.734.585
1.778.321
255.012.131
14.008.492
(2.996.030)
(912.549)
265.112.044
3.169.967
26.329.510
78.767.835
3.798.622
16.542.448
1.291.595
1.484.822
2.743.712
7.888.637
676.214
2.484.744
178.158
(416.195)
(403.800)
(266.848)
-
-
4.654.789
29.073.222
86.240.277
4.071.036
18.760.344
1.469.753
129.899.977
15.456.287
(1.086.843)
-
144.269.421
125.112.154
120.842.623
95
Introduction
Activities
Sustainability
For the year ended December 31, 2012, the movement of property, plant and equipment and the accumulated depreciation is as
follows:
Cost:
Land
Land improvements
Buildings
Motor vehicles
Construction in progress
Accumulated depreciation:
Land improvements
Buildings
Motor vehicles
Net book value
January 1, 2012
Additions
Disposals
36.970.746
6.315.934
57.228.511
88.778.684
6.936.226
23.123.058
1.448.602
10.604.273
486.000
27.687
15.000
3.028.562
3.085.172
3.615.445
15.040.416
3.724.607
2.355.385
(230.227) 17.212.010
(1.351.065)
33.498
(110.893)
1.163.438
288.744
- (24.777.682)
37.456.746
10.068.228
59.598.896
108.789.029
8.703.831
27.791.048
1.737.346
867.007
231.406.034
25.298.282
(1.692.185)
-
255.012.131
2.527.139
23.662.910
72.176.019
3.601.725
14.891.289
1.246.061
642.828
2.666.600
6.820.784
500.478
1.733.849
45.534
(228.968)
(303.581)
(82.690)
-
-
3.169.967
26.329.510
78.767.835
3.798.622
16.542.448
1.291.595
118.105.143
12.410.073
(615.239)
-
129.899.977
113.300.891
125.112.154
For the years ended December 31, 2013 and 2012, the allocation of depreciation and amortization expenses of property, plant
and equipment and intangibles has been as follows:
December 31, 2013 December 31, 2012
Cost of goods sold
Costs related to uncompleted contracts
General administrative expenses
Development projects in process
Depreciation on outstanding inventories
Selling and marketing expenses
96
23.503.078
5.681.297
7.002.752
1.333.315
1.742.078
449.198
736.227
16.406.313
5.505.228
4.793.921
1.168.816
1.165.354
616.467
601.967
40.447.945
30.258.066
Other Information
As of December 31, 2013 and December 31, 2012, gross values of fully depreciated items which are still in use are as follows:
Motor vehicles
65.632.260
2.588.360
12.135.350
1.120.006
61.596.818
2.556.760
11.966.130
1.120.006
81.475.976
77.239.714
13. Intangible assets
For the year ended December 31, 2013, the movement of intangibles and accumulated amortization is as follows:
January 1, 2013
Cost:
Other intangible assets
Development costs
Accumulated amortization:
Development costs
Net book value
Additions
10.181.064
114.200.265
19.674.691
1.195.768
912.549
- 33.169.073
49.134.208 (33.169.073)
12.289.381
147.369.338
35.639.826
144.056.020
50.329.976
912.549
195.298.545
6.882.799
37.131.351
1.488.581
23.503.077
-
8.371.380
60.634.428
44.014.150
24.991.658
69.005.808
100.041.870
126.292.737
For the year ended December 31, 2012, the movement of intangibles and accumulated amortization is as follows:
January 1, 2012
Cost:
Development costs
Accumulated amortization:
Development costs
Net book value:
Additions
7.958.897
80.600.486
9.081.096
2.222.167
- 33.599.779
44.193.374 (33.599.779)
10.181.064
114.200.265
19.674.691
97.640.479
46.415.541
-
144.056.020
5.423.475
20.742.682
1.459.324
16.388.669
-
6.882.799
37.131.351
26.166.157
17.847.993
-
44.014.150
71.474.322
100.041.870
97
Introduction
Activities
Sustainability
As of December 31, 2013 and December 31, 2012, the gross values of fully amortized intangible assets which are still in use are as
follows:
R&D expenses (amortized)
December 31, 2013
December, 31 2012
6.131.494
5.848.347
3.839.842
2.550.970
11.979.841
6.390.812
December 31, 2013
December, 31 2012
1.467.624
7.055.794
670.521
2.332.562
8.523.418
3.003.083
14. Government grants and incentives
Short term
Long term
Total
Government incentives have been originated from deferral of research and development incentive premiums provided to support
research and development expenditures of the Company’s various projects by the Scientific & Technological Research Council of
Turkey (TÜBİTAK). The related balance will be recognized as revenue in line with the amortization of the respective development
investments.
15. Provisions, contingent assets and liabilities
Provisions - short term
Provision for other costs
Warranty provision
Blue-collar worker salary difference provision
Cost provision of imported goods
Provision for sales commissions
Provision for legal cases
Provision for guarantee letter commissions
December 31, 2013
December, 31 2012
76.011.181
18.914.980
135.774
735.433
127.838
74.464
208.617.007
13.391.500
1.504.996
1.039.950
894.634
127.838
43.124
95.999.670
225.619.049
December 31, 2013
December, 31 2012
6.341.178
4.443.939
6.341.178
4.443.939
Provisions - long term
Warranty provision
98
Other Information
Provision for other costs
Includes costs incurred by the Company related with tank project, which were not charged yet, and costs incurred by the
subcontractors that will be invoiced to the Company at the end of the project, which were computed according to the estimated
percentage of completion.
The movements of provision for other cost are as follows:
January 1
Additional provision/payment, net
Foreign exchange valuation
As of December 31
December 31, 2013
December,31 2012
208.617.007
(124.345.166)
(8.260.660)
183.334.944
37.591.617
(12.309.554)
76.011.181
208.617.007
Warranty provision
The Company provides one year warranty for minibus and Land Rover vehicles and 2 years warranty for certain armoured vehicle
models and commercial vehicles sold. Therefore, warranty expense provision has been recorded only for the vehicles under
guarantee as of the balance sheet date. The movement of the warranty expense provision is as follows:
January 1
Additional provision (Note 21)
Realized payments
As of December 31
December 31, 2013
December,31 2012
17.835.439
28.233.403
(20.812.684)
18.768.929
17.345.018
(18.278.508)
25.256.158
17.835.439
December 31, 2013
December,31 2012
894.634
717.851
(877.052)
1.920.005
1.374.984
(2.400.355)
735.433
894.634
Provision for sales commissions
The movements of provision for sales commissions are as follows:
January 1
Increase
Realized
As of December 31
Commitments and contingencies
As of December 31, 2013 and December 31, 2012, the tables which represent the position of guarantees, pledges and mortgages
are as follow:
Guarantees given by the Company
a. Total amount of guarantees, pledges and mortgages given in the name of
legal entity
b. Total amount of guarantees, pledges and mortgages given in favour of the
parties which are included in the scope of full consolidation.
c. Total amount of guarantees, pledges and mortgages given to third parties
for their liabilities in the purpose of conducting the ordinary operations.
d. Total amount of other guarantees, pledges and mortgages
Total
December 31, 2013
December 31, 2012
796.640.829
637.586.146
-
-
-
-
796.640.829
637.586.146
99
Introduction
Activities
Sustainability
The details of guarantees, pledges and mortgages in terms of currency are as follows:
December 31, 2013
Original currency
USD
EUR
GBP
SAR
TL
274.909.369
40.592.173
22.000.000
78.183.527
December 31, 2012
Original currency
TL
586.739.066
119.198.916
12.519.320
78.183.527
301.585.793
15.175.004
9.192
64.265.867
796.640.829
TL
537.606.836
35.687.056
26.387
64.265.867
637.586.146
The details of guarantees, pledges and mortgages in terms of company/institution are as follows:
Guarantee letters given
Under secretariat of Ministry of Defence
Other
421.597.311
375.043.518
405.591.826
231.994.320
796.640.829
637.586.146
Letters of guarantees
a) Guarantees given as of December 31, 2013 and December 31, 2012 are as follows:
Bank letters of guarantee (*)
796.640.829
637.586.146
796.640.829
637.586.146
Bank letter of guarantee amounting to TL 421.597.311 are given to Under Secretariat of Ministry of Defence within the scope of Altay Project. (December 31, 2012 TL 405.591.826)
(*)
b) Guarantee received as of December 31, 2013 and 2012 as follows;
Bank letters of guarantee (**)
Guarantee notes
Mortgages received
Guarantee cheques
(**)
331.750.195
37.121.748
842.000
280.000
285.704.758
56.509.498
3.842.000
-
369.993.943
346.056.256
Bank letters of guarantee amounting to TL 146.570.489 are obtained from the sub-contractors for Altay Project (December 31, 2012 - TL 157.770.977).
Contingent assets
The case of tax deduction related to R&D discount for the R&D activities in 2010 has ended on behalf of the Company and TL
2.923.627 has been returned to the Company. For the same case of 2011, it is subject to legal case and not concluded yet. The
expected return amount of 2011 is TL 3.963.320. There is a legal case in 2012 but it has been win, it is on the appeal status. The
expected effective amount as of December 31, 2013 is TL 12.517.001.
100
Other Information
16. Employee benefits
Provision for retirement pay liability
Provision for vacation pay liability
16.173.142
4.443.081
13.716.119
3.313.961
Total
20.616.223
17.030.080
Reserve for retirement pay
There are no agreements for pension commitments other than the legal requirements as explained below.
Under the Turkish Labour Law, the Company is required to pay termination benefits to each employee who has completed one
year of service and whose employment is terminated without due cause, or who is called up for military service, dies or retires after
completing 25 years of service (20 years for women) and achieves the retirement age.
The amount payable consists of one month’s salary limited to a maximum of TL 3.254 for each year of service as of December 31,
2013 (December 31, 2012 - TL 3.034).
The liability is not funded, as there is no funding requirement.
The provision has been calculated by estimating the present value of the future probable obligation of the Company arising from the
retirement of the employees.
Turkish Accounting Standards promulgated by POA require actuarial valuation methods to be developed to estimate the
enterprises’ obligation under defined benefit plans. Accordingly, the following actuarial assumptions were used in the calculation of
the total liability:
Net discount rate (%)
Turnover rate to estimate the probability of retirement (%)
4,78
2,66
3,86
3,71
The principal assumption is that the maximum liability for each year of service will increase in line with inflation. Thus the
discount rate applied represents the expected real rate after adjusting for the anticipated effects of future inflation.
The movements of reserve for retirement pay are as follows:
January 1
Interest expense
Current year provision (including actuarial gains/losses)
Actuarial loss
Payments
13.716.119
1.241.308
2.098.736
1.281.279
(2.164.300)
9.110.483
911.048
3.019.176
2.364.524
(1.689.112)
As of December 31
16.173.142
13.716.119
101
Introduction
Activities
Sustainability
Provision for vacation pay liability
The movements of reserve for vacation pay are as follows:
December 31, 2013
December 31, 2012
January 1
Net increase (Note 21)
3.313.961
1.129.120
2.235.464
1.078.497
As of December 31
4.443.081
3.313.961
December 31, 2013
December 31, 2012
Advances given
Prepaid expenses
70.119.606
4.865.509
131.619.702
1.834.083
Total
74.985.115
133.453.785
December 31, 2013
December 31, 2012
Value added tax receivables
Prepaid taxes and funds
Other
16.242.267
811.658
17.241.400
2.072.249
2.166.929
Total
17.053.925
21.480.578
December 31, 2013
December 31, 2012
Deferred maintenance revenues (*)
Advances taken
37.810.773
268.515.741
1.595.339
145.260.185
Deferred income-short term
306.326.514
146.855.524
Deferred maintenance revenues (*)
48.874.707
5.644.080
Deferred income-long term
48.874.707
5.644.080
17. Prepaid expenses, deferred revenue, other assets and liabilities
a) Prepaid expenses:
b) Other current assets:
c) Deferred income:
(*)
Composed of deferred repair maintenance income for sold vehicles via agreements signed.
102
Other Information
d) Employee benefit obligations
Payable to personnel
Social security premium payables
Taxes and funds payable
10.450.853
3.393.459
5.299.228
8.828.874
3.152.862
5.184.229
Total
19.143.540
17.165.965
e) Other short term liabilities
Taxes and funds payables
Deferred special consumption tax
Other
Total
827.468
447.325
340.654
718.391
249.277
109.240
1.615.447
1.076.908
18. Shareholders’ equity
Share Capital
As of December 31, 2013 and 2012, the principal shareholders and their respective shareholding percentages are as follows:
TL
December 31, 2013
%
TL
December 31, 2012
%
Koç Holding A.Ş.
Other
10.722.750
5.954.944
7.322.306
44,68
24,81
30,51
10.722.750
5.954.944
7.322.306
44,68
24,81
30,51
Total
24.000.000
100,00
24.000.000
100,00
52.743.030
52.743.030
Total
76.743.030
76.743.030
Shareholders
Retained earnings, as per the statutory financial statements, other than legal reserve, are available for distribution, subject to the
legal reserve requirement referred to below.
The legal reserve consists of first and second legal reserves, allocated in accordance with the Turkish Commercial Code. The
first legal reserve is allocated out of last period’s statutory profits at the rate of 5% per annum until the total reserve reaches
20% of the paid-in share capital (not indexed to the inflation). The second legal reserve is allocated after the first legal reserve
and dividends, at the rate of 10% per annum of all cash dividend distributions. The first and the second legal reserves are not
available for distribution unless they exceed 50% of the share capital, but may be used to absorb losses in the event that the
general reserve is exhausted.
Listed companies distribute dividend in accordance with the Communiqué No. II-19.1 issued by the CMB which is effective from
February 1, 2014.
103
Introduction
Activities
Sustainability
Companies distribute dividends in accordance with their dividend payment policies settled and dividend payment decision taken
in general assembly and also in conformity with relevant legislations. The communiqué does not constitute a minimum dividend
rate. Companies distribute dividend in accordance with the method defined in their dividend policy or articles of incorporation.
In addition, dividend can be distributed by fixed or variable installments and advance dividend can be paid in accordance with
profit on interim financial statements of the Company. In accordance with the Turkish Commercial Code (TCC), unless the required reserves and the dividend for shareholders as
determined in the article of association or in the dividend distribution policy of the company are set aside, no decision may be
made to set aside other reserves, to transfer profits to the subsequent year or to distribute dividends to the holders of usufruct
right certificates, to the members of the board of directors or to the employees; and no dividend can be distributed to these
persons unless the determined dividend for shareholders is paid in cash.
As of December 31, 2013, in the financial statements of the Company prepared in accordance with financial reporting
standards published by Capital Markets Board net income of the year and prior year profits including other reserves to be
distributed as dividend is TL 96.561.743 (December 31, 2012 - TL 78.276.597) and TL 74.438.113 (December 31, 2012 - TL
66.441.516), respectively. Current year net income of the Company in statutory books is TL 201.282.157 (December 31, 2012
- TL 64.221.758), other reserves to be distributed as dividend (without being subject to additional taxation) is TL 79.228.287
(December 31, 2012 - TL 85.032.212). In addition, in statutory books there is TL 16.224.790 inflation adjustment and TL
17.400.229 other capital reserves that are subject to taxation if they are distributed. After deduction of first legal reserves, current
year net profit in statutory books is TL 201.282.157 (December 31, 2012 - TL 64.221.758). As of our report date, there is no
decision of dividend distribution related to 2013.
In accordance with the Communiqué, as of December 31, 2013 and December 31, 2012, the details of equity, based on which
the dividend will be distributed is as follows:
Paid-in share capital
Restricted reserves
Accumulated other comprehensive income and expense that is not subject to
reclassification to income or loss
Retained earnings
- Extraordinary reserves
- Inflation adjustments on legal reserves
Net income for the year
Total shareholders’ equity
104
24.000.000
52.743.030
29.078.147
24.000.000
52.743.030
22.798.147
(3.551.453)
(2.526.430)
63.488.030
10.950.083
96.561.743
55.491.433
10.950.083
78.276.597
273.269.580
241.732.860
Other Information
As of December 31, 2013 and 2012, the restated amounts and the equity restatement differences of the aforementioned nominal
values are as follows:
Historical value
December 31, 2013
Inflation adjustments
on equity items
Restated value
Share capital
Legal reserves
24.000.000
29.078.147
52.743.030
10.950.083
76.743.030
40.028.230
Total
53.078.147
63.693.113
116.771.260
Historical value
December 31, 2012
Inflation adjustments
on equity items
Restated value
Share capital
Legal reserves
24.000.000
22.798.147
52.743.030
10.950.083
76.743.030
33.748.230
Total
46.798.147
63.693.113
110.491.260
Historical value of legal and extraordinary reserves in the statutory financial statements are as follows:
Legal reserves
Extraordinary reserves
Total
Dividends distributed during the year based on previous
year’s net income per statutory financial statements
Dividend paid per share (kuruş)
December 31, 2013
December 31, 2012
29.078.147
79.228.287
22.798.147
85.032.212
108.306.434
107.830.359
64.000.000
48.000.000
0,267
0,200
The Company’s share capital is fully paid, and consists of 24.000.000.000 shares with kuruş 0,1 par value each.
19. Sales and cost of sales
Net sales
Domestic sales
Export sales
1.176.612.836
225.504.622
744.807.655
260.164.645
Gross sales
1.402.117.458
1.004.972.300
(564.524)
(480.068)
1.401.552.934
1.004.492.232
Less: sales discounts and sales returns
Net sales
105
Introduction
Activities
Sustainability
Sales of the Company in terms of the number of vehicles sold are as follows:
Commercial vehicle
Armoured vehicles
Other sales (*)
(*)
789.456.300
349.489.205
262.607.429
1.401.552.934
481.503.639
307.079.062
215.909.531
1.004.492.232
TL 151.849.248 of this amount is related to revenues of uncompleted contracts (2012 - 130.428.038 TL).
Cost of sales
Cost of finished goods sold
Cost of merchandise sold
1.031.647.409
54.894.650
739.511.805
41.482.525
Cost of sales
1.086.542.059
780.994.330
20. Research and development expenses, marketing, sales and distribution expenses, general administrative expenses
Marketing, sales and distribution expenses
118.705.403
38.480.120
25.796.799
78.377.147
33.445.652
17.645.232
Total operating expenses
182.982.322
129.468.031
December 31, 2013
868.105.029
24.895.539
54.894.650
38.245.632
142.885.391
25.407.956
26.171.566
28.233.403
7.822.089
10.465.057
2.118.237
(311.216)
40.591.048
December 31, 2012
626.783.709
(288.737)
41.688.944
29.092.605
111.926.656
23.390.540
22.943.859
17.345.018
5.314.642
9.356.360
7.394.172
40.236
17.838.881
1.269.524.381
912.826.885
21. Expenses by nature
Cost of raw material and consumption goods
Change in finished goods and work-in-process
Cost of merchandises sold
Depreciation and amortization expense
Personnel expenses
Operational expenses
Administrative expenses
Warranty reserve expense (Note 15)
Exhibition and fair expenses
Transportation, distribution and storage expenses
Advertisement and promotion expenses
Provisions of impairment for inventories (Note 10)
Other expenses
Total
106
Other Information
The breakdown of personnel expenses is as follows:
79.297.998
19.791.207
20.035.036
19.295.905
22.305.499
2.194.781
162.920.426
60.937.600
17.950.406
16.118.033
16.016.642
13.867.601
789.883
125.680.165
122.502.421
20.613.487
15.335.354
3.340.044
1.129.120
162.920.426
95.508.920
14.526.177
10.636.347
3.930.224
1.078.497
125.680.165
73.320.858
11.860.256
11.250.490
839.682
4.061.522
86.405.935
20.290.361
13.466.940
622.673
4.166.610
101.332.808
124.952.519
Other expense
Foreign exchange loss from trade receivable/payables
Forward transaction expenses
Provision for doubtful receivables (Note 8)
Other
(41.765.324)
(31.085.765)
(2.309.088)
(213.956)
(91.354.146)
(12.260.295)
(2.736.485)
(151.596)
Total
(75.374.133)
(106.502.522)
With respect to the account:
Cost of sales and inventories on hand
Costs related to uncompleted contracts
Capitalized development expenditures
Marketing, sales and distribution expenses
By nature:
Wages and salaries
Social security premiums
Other social benefits
Employee termination benefits (Note 16)
Provision for vacation pay liability (Note 15)
22. Other operating income/expenses
Other income
Foreign exchange gain from trade receivable/payables
Forward transaction income
Maturity difference income
Incentive income
Other
Total
107
Introduction
Activities
Sustainability
23. Financial income
Interest income from time deposits
Foreign exchange gains on deposits
Foreign exchange gains on bank borrowings
322.326
2.443.596
242.000
1.031.089
4.070.931
-
Total
3.007.922
5.102.020
Interest expense on bank borrowings
Foreign exchange losses on deposits
Foreign exchange losses on bank borrowings
(33.686.402)
(5.771.626)
(13.595.300)
(26.195.252)
(7.219.340)
-
Total
(53.053.328)
(33.414.592)
24. Financial expense
25. Tax assets and liabilities
The Company is subject to taxation in accordance with the tax regulation and the legislation effective in Turkey. Otokar SAS
Europe is subject to taxation in accordance with the tax regulation and the legislation effective in France.
In Turkey, the corporation tax rate is 20% (2012 - 20%). Corporate tax returns are required to be filed by the twenty-fifth day of
the fourth month following the balance sheet date and taxes must be paid in one installment by the end of the fourth month. The
tax legislation provides for a temporary tax of 20% to be calculated and paid based on earnings generated for each quarter. The
amounts thus calculated and paid are offset against the final corporate tax liability for the year.
Corporate tax losses can be carried forward for a maximum period of 5 years following the year in which the losses were
incurred. The tax authorities can inspect tax returns and the related accounting records for a retrospective maximum period of
five years.
15% withholding applies to dividends distributed by resident real persons, those who are not liable to income and corporation
tax, non-resident real persons, non-resident corporations (excluding those that acquire dividend through a permanent
establishment or permanent representative in Turkey) and non-resident corporations exempted from income and corporation tax.
Dividend distribution by resident corporations to resident corporations is not subject to a withholding tax. Furthermore, in the
event the profit is not distributed or included in capital, no withholding tax shall be applicable.
Research and development incentive rate which will be calculated over the research and development expenditures, is raised to
100% from 40% with the amendment made to the 10th article of the Tax Law numbered 5520 as a result of the amendment in the
35th article of the Law 5746 related to the Support of Research and Development Operations.
The aforementioned law has been enacted as of April 1, 2008. Accordingly, income tax-payers can deduct 100% of the
expenditures made as of then, which are related to research and development related to new technology and information
developments. Research and development incentives shall be calculated over the total expenditures made in 2013 and 2012.
As a result of its research and development expenditures made in 2013 amounting to TL 40.528.378 (2012 - TL 39.666.087), the
Company has utilized research and development incentives at 100% deduction without any withholding tax. The Company has
an R&D center certificate.
108
Other Information
As of December 31, 2013 and 2012, income tax payables are presented net of prepaid taxes in the balance sheet as follows:
Income tax payable
(-) Prepaid tax
Income tax payable, net
December 31, 2013
December 31, 2012
43.641.898
(36.598.851)
6.799.697
(8.871.946)
7.043.047
(2.072.249)
The breakdown of total tax expense for the year ended December 31, 2013 and 2012:
Current tax charge
Deferred tax income
Tax charged to profit for the period
Tax charged to other comprehensive income/expense
(43.676.005)
(3.876.947)
31.989.428
256.256
(2.028.921)
472.905
Total tax expense
(11.430.321)
(5.432.963)
Profit before tax
Income tax charge at effective tax rate 20%
Effect of exemptions and incentives
Other differences
108.248.320
(21.649.664)
9.377.679
585.408
84.182.465
(16.836.493)
10.856.844
73.781
Total tax expense
(11.686.577)
(5.905.868)
The reconciliation of profit before tax to total tax expense is as follows:
109
Introduction
Activities
Sustainability
As of December 31, 2013 and 2012, the breakdown of deferred tax bases and deferred tax liability computed using the current
effective tax rates are as follows:
Cumulative temporary differences
Deferred tax assets/(liability)
December 31, 2013 December 31, 2012 December 31, 2013 December 31, 2012
Intangibles
Deferred financial expense
Inventories
Warranty provision
Reserve for retirement pay
Deferred financial income
Other provisions
Deferred maintenance income
Adjustment for percentage of
completion method on construction
projects
Other
(12.975.519)
(20.553.326)
(501.791)
1.373.503
25.256.158
16.173.142
18.051.122
6.948.144
86.685.480
12.960.293
(16.526.630)
(305.425)
1.779.547
17.835.439
13.716.119
4.175.331
8.986.866
6.937.515
886.191
(4.110.665)
(100.358)
274.701
5.051.232
3.234.628
3.610.224
1.389.629
17.337.095
889.236
(3.305.326)
(61.085)
355.909
3.567.088
2.743.224
835.066
1.797.373
1.387.503
71.706.219
7.120.490
13.651.109
765.627
14.341.244
1.424.099
2.730.222
153.126
43.338.020
11.092.336
Deferred tax asset
The movement of deferred tax asset for the years ended December 31, 2013 and 2012 is as follows:
January 1
Deferred tax income
Tax charged to profit for the period
Tax charged to other comprehensive income/expense
11.092.336
12.648.352
31.989.428
256.256
(2.028.921)
472.905
43.338.020
11.092.336
26. Earnings per share
Earnings per share are calculated by dividing net profit by the weighted average number of shares that have been outstanding
during the year concerned.
Companies can increase their share capital by making a pro rata distribution of shares to existing shareholders without
consideration for amounts resolved to be transferred to share capital from retained earnings. For the purpose of the earnings per
share calculation such Bonus Share issues are regarded as stock dividends. Dividend payments, which are immediately reinvested
in the shares of the Company, are regarded similarly.
Earnings per main share are determined by dividing net income of the shareholders by the weighted average number of shares that
have been outstanding during the related year concerned.
Net income attributable to shareholders (TL)
Weighted average number of issued shares
Earnings per share (kuruş)
110
96.561.743
24.000.000.000
0,402
78.276.597
24.000.000.000
0,326
Other Information
27. Related party disclosures
Due from and due to the related parties at the year end and transactions with related parties during the year are as follows:
(i) Due from and due to related party balances as of December 31, 2013 and December 31, 2012:
Due from related parties
Ram Dış Ticaret A.Ş. (1) (*)
Otokar Europe SAS (3)
Türk Traktör ve Ziraat Makineleri A.Ş. (1)
Aygaz A.Ş. (1)
Ford Otosan A.Ş. (2)
Koç Üniversitesi (1)
Other (1)
63.946.381
6.566.672
740.510
73.609
32.773
12.850
1.254
23.141.922
608.470
492.700
23.950
283.023
Total
71.374.049
24.550.065
Certain portion of export sales are realized through Ram Dış Ticaret A.Ş. as export registered sales, accordingly the amount composed of accounts receivables
arising on these transactions.
(*)
Due to related parties
Ram Dış Ticaret A.Ş. (1)
Zer Merkezi Hizmetler A.Ş. (1)
KoçSistem Bilgi ve İletişim Hizm. A.Ş. (1)
Setur Servis Turistik A.Ş. (1)
Eltek Elek.Enerji İth.İhr.Top.Tic.A.Ş. (1)
Koçtaş Yapı Marketleri A.Ş. (1)
Opet Fuchs Madeni Yağ A.Ş. (1)
Akpa Dayanıklı Tük. Paz. A.Ş. (1)
Otokoç Otomotiv Tic. ve San. A.Ş. (1)
Ram Sigorta Aracılık Hz. A.Ş. (1)
Opet Petrolcülük A.Ş. (1)
Koç Holding A.Ş. (2)
Divan Turizm İşletmeleri A.Ş. (1)
Arçelik A.Ş. (1)
Ark İnşaat A.Ş. (1)
Bilkom A.Ş. (1)
Ford Otosan A.Ş. (2)
Promena Elektronik Ticaret A.Ş. (1)
Total
6.691.466
2.273.182
1.573.987
732.046
372.365
353.820
280.439
271.553
235.919
202.176
91.401
74.846
1.124
213
-
2.471.861
1.583.589
1.588.261
904.628
221.594
154.030
494.223
195.013
483.269
54.823
49.343
66.805
243.629
442.799
1.463
179
33.406
13.154.537
8.988.915
Related parties of parent company
Shareholder
(3)
The Company’s subsidiary not in scope of consolidation
(1)
(2)
111
Introduction
Activities
Sustainability
ii) Major sales and purchase transactions with related parties:
Product sales and service revenue
Ram Dış Ticaret A.Ş. (1) (*)
Yapı veKredi Bankası A.Ş. (1)
Aygaz A.Ş. (1)
Arçelik A.Ş.
Ford Otosan A.Ş.(2)
RMK Marine (1)
186.982.566
10.381.427
7.705.890
1.050.000
563.274
128.000
122.850
785
257
-
233.281.162
607.601
6.808.068
301.178
235.000
2.116
1.610.352
Total
206.935.049
242.845.477
(*)
The export registered sales to Ram Dış Ticaret A.Ş., comprise export sales made to third party customers.
Purchase of property, plant and equipment
Koç Sistem Bilgi ve İletişim Hizm. A.Ş. (1)
Ark İnşaat A.Ş.(1)
Arçelik A.Ş. (1)
3.114.231
695.039
237.371
123.955
42.534
14.508
3.005.744
4.399.718
61.885
40.802
68.494
36.924
Total
4.227.638
7.613.567
Akpa Dayanıklı Tük.Paz. A.Ş. (1)
Opet Fuchs Madeni Yağ A.Ş. (1)
Opet Petrolcülük A.Ş. (1)
Arçelik A.Ş. (1)
Ford Otosan A.Ş.(2)
15.965.345
12.169.043
3.866.486
1.684.629
1.645.668
1.613.674
551.629
8.908
-
10.968.070
6.124.679
3.374.953
677.611
941.070
1.005.270
829.041
205.837
392
Total
37.505.382
24.126.923
Inventory purchased
Shareholder
(3)
(1)
(2)
112
Other Information
Services purchased
Setur Servis Turistik A.Ş. (1)
Eltek Elek.Enerji İth.İhr.Top.Tic.A.Ş. (1)
Koç Holding A.Ş. (2)
KoçSistem Bilgi ve İletişim Hizm. A.Ş. (1)
Yapı Kredi Kültür ve Sanat Yay.Tic.ve San.A.Ş. (1)
Koç Üniversitesi (1)
Setair Hava Taşımacılığı ve Hizm. A.Ş. (1)
Divan Turizm İşletmeleri A.Ş. (1)
Promena Elektronik Ticaret A.Ş. (1)
Ram Sigorta Aracılık Hz. A.Ş. (1) (*)
Vehbi Koç Vakfı Amerikan Hastanesi (1)
Tanı Pazarlama ve İletişim Hizmetleri A.Ş. (1)
Rahmi Koç Vakfı Müzesi (1)
Other (1)
Total
8.311.633
5.695.965
3.310.214
2.559.423
2.026.246
1.277.242
966.033
215.000
182.248
88.760
84.994
52.660
51.773
37.621
27.687
11.063
5.240
7.505.596
4.335.385
2.378.439
1.353.018
1.325.130
1.051.726
56.896
111.702
69.905
170.752
34.513
16.676
28.240
23.889
24.903.802
18.461.867
It includes paid and accrued premium as of December 31, 2013 in accordance with insurance policies signed between unrelated insurance companies via Ram
Sigorta Aracılık Hizmetleri A.Ş. which is an insurance agency.
(*)
Bank deposits
December 31, 2013
December 31, 2012
1.680.822
2.750.000
903.749
-
4.430.822
903.749
December 31, 2013
December 31, 2012
33.393.531
37.314.908
33.393.531
37.314.908
Yapı ve Kredi Bankası A.Ş. (1)
47.093.434
2.025.916
Total
47.093.434
2.025.916
- Demand deposits
- Time deposits
Checks and notes in collection
Shareholder
(3)
(1)
(2)
Borrowings
113
Introduction
Activities
Sustainability
For the year ended December 31 financial income and expense with related parties:
Interest income
253.108
243.407
Total
253.108
243.407
743.129
338.928
Total
743.129
338.928
867.470
132.332
Total
867.470
132.332
6.846.590
1.479.877
Total
6.846.590
1.479.877
Forward gains
Forward loss
-
21.000
Total
-
21.000
Other (1)
3.889.529
257.949
2.331
7.493.280
2.308
Total
4.149.809
7.495.588
Other (1)
1.602.397
16.857
8.680.101
13.791
Total
1.619.254
8.693.892
Foreign exchange gains
Interest expense
Foreign exchange loss
Forward gains/(losses)
(1)
Related parties of the parent company
For the year ended December 31, other income and expense with related parties:
Exchange gain from trade receivables and payables
Exchange loss from trade receivables and payables
(1)
(3)
Related parties of the parent Company
114
Other Information
Benefits provided to executives
Salaries and similar benefits provided to the executive management by the Company for the year ended December 31, 2013
amounted to TL 11.649.528 (2012 - TL 9.218.838). Executives are composed of board of directors members, general manager
and assistants of general manager.
28. Nature and level of risks arising from financial instruments
The Company is exposed to a variety of financial risks, including the effects of changes in debt and equity market prices, foreign
currency exchange rates and interest rates. These risks are market risk (including foreign currency risk and interest rate risk), credit
risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial markets and
seeks to minimize potential adverse effects on the financial performance of the Company.
Credit risk
Ownership of financial assets involves the risk that counterparties may be unable to meet the terms of their agreements. These
risks are monitored by limiting the aggregate risk from any individual counterparty (excluding related parties) and by receiving
guarantees from customers when considered necessary. Credit risk of the Company mainly arises from trade receivables. The
Company manages this risk that may arise from its dealers or from other customers by restricting the credit limits determined for
the dealers according the amount of guarantees received, by receiving advance payments or by receiving the pledge of ownership
of the vehicles sold. Credit limits are regularly monitored by the Company and the customers’ credit quality are regularly evaluated
by considering the customer’s financial position, past experiences and other factors. All foreign sales are made after receiving
confirmed letters of credit. Military vehicle sales are made to domestic or foreign governmental institutions or to companies
acting as agents to these institutions; accordingly, the Company does not anticipate any collection risk related to military vehicle
sales. Trade receivables are evaluated by management based on their past experiences and current economic condition, and are
presented in financial statements net of provision for doubtful receivables (Note 8).
December 31, 2013
Maximum credit risk exposure as of reporting date
(A+B+C+D+E) (1)
- Maximum risk secured by guarantee (2)
A. Net book value of financial assets neither overdue nor
impaired
B. Net book value of financial assets of which conditions
are negotiated, otherwise considered as impaired or
overdue
C. Net book value of assets overdue but not impaired
D. Net book value of impaired assets
- Overdue (gross book value)
- Impairment (-) (Note 8)
- Net value under guarantee
- Not overdue (gross book value)
- Impairment (-)
E. Off- balance sheet items having credit risk
Trade
receivables
Receivables
Other
receivables (3)
Bank deposits
Derivative
instruments
592.159.191
(133.604.494)
70.180.242
-
5.992.822
-
-
589.412.307
70.180.242
5.992.822
-
275.818
2.471.066
24.432.188
(21.961.122)
2.471.066
-
-
-
-
115
Introduction
Activities
Sustainability
December 31, 2012
Maximum credit risk exposure as of reporting date
(A+B+C+D+E) (1)
- Maximum risk secured by guarantee (2)
A. Net book value of financial assets neither overdue nor
impaired
B. Net book value of financial assets of which conditions
are negotiated, otherwise considered as impaired or
overdue
C. Net book value of assets overdue but not impaired
D. Net book value of impaired assets
- Overdue (gross book value)
- Impairment (-) (Note 8)
- Not overdue (gross book value)
- Impairment (-)
E. Off- balance sheet items having credit risk
Trade
receivables
Receivables
Other
receivables (3)
Bank deposits
Derivative
instruments
284.091.153
(137.969.024)
131.669.388
-
43.832.628
-
-
280.915.344
131.669.388
43.832.628
-
1.293.433
1.882.376
21.629.824
(19.747.448)
1.882.376
-
-
-
-
Guarantees received and factors increasing the loan reliability are not considered when determining this amount.
Guarantees consist of guarantee notes, guarantee checks, mortgages and car pledges received from customers.
(3)
The major amount of other receivables consists of advances given.
(1)
(2)
Liquidity risk
Prudent liquidity risk management includes maintaining sufficient cash and marketable securities, the availability of funding from
an adequate amount of committed credit facilities and the ability to close out market positions.
The ability to fund existing and prospective debt requirements is managed by maintaining the availability of adequate committed
funding lines from high quality lenders.
116
Other Information
As of December 31, 2013 and December 31, 2012, maturities of gross trade payables and financial liabilities are as follows:
December 31, 2013
Maturities per
agreements
Book value
Total cash
outflow per
agreement
(=I+II+III+IV)
Non-derivative financial
liabilities
Bank loans
Trade payables
473.011.272
102.434.509
529.670.314
102.936.822
Expected maturities
Total expected
cash outflow
Book value
(=I+II+III+IV)
liabilities
Other payables
30.790.110
787.977
30.790.110
787.977
Book value
Total cash
outflow
expected/per
agreement
(=I+II+III+IV)
(1.231.950)
168.937.315
(170.169.265)
(1.231.950)
168.937.315
(170.169.265)
Expected maturities
(or maturities per
agreement)
Derivative financial
liabilities (net)
Derivative cash inflows
Derivative cash outflows
Less than 3
Between
month (I) 3-12 month (II)
Between
1-5 year (III)
Over 5 years
(IV)
110.194.540
102.733.952
58.582.085
202.870
360.893.689
-
-
Less than 3
Between
Between
1-5 year
(III)
Over 5 years
(IV)
-
-
-
Less than 3
Between
Between
1-5 year
(III)
Over 5 years
(IV)
30.790.110
787.977
(1.231.950)
168.937.315
(170.169.265)
-
-
-
117
Introduction
Activities
Sustainability
December 31, 2012
Maturities per
agreements
Book value
Total cash
outflow per
agreement
(=I+II+III+IV)
liabilities
Bank loans
Trade payables
286.193.001
85.026.598
333.494.844
85.332.993
Expected maturities
Total expected
cash outflow
(=I+II+III+IV)
Book value
liabilities
Other payables
18.606.987
1.076.908
18.606.987
1.076.908
Book value
Total cash
outflow
expected/per
agreement
(=I+II+III+IV)
(2.193.011)
211.228.195
(213.421.206)
(2.193.011)
211.228.195
(213.421.206)
Expected maturities
(or maturities per
agreement)
Derivative financial
liabilities (net)
Derivative cash inflows
Derivative cash outflows
Less than 3
Between
Between
1-5 year (III)
Over 5 years
(IV)
16.242.844
186.300
265.500.006
-
-
Less than 3
Between
Between
1-5 year
(III)
Over 5 years
(IV)
-
-
-
Less than 3
Between
Between
1-5 year
(III)
Over 5 years
(IV)
51.751.994
85.146.693
18.606.987
1.076.908
(2.193.011)
211.228.195
(213.421.206)
-
-
-
Market risk
a) Foreign currency risk and related sensitivity analysis
The Company is exposed to the foreign exchange risk through the rate changes at the translation of foreign currency
denominated liabilities to local currency. These risks are monitored and limited by analyzing the foreign currency position.
Currency risk is monitored and limited by analyzing the foreign currency position. The Company follows a policy of diversifying
its foreign currency position in order to manage the foreign currency risk that may arise due to future operations and recognized
assets and liabilities.
118
Other Information
The accompanying table represents the foreign currency risk of the assets and liabilities of the Company in the original
currencies.;
Table of foreign currency position
December 31, 2013
1.
2a.
2b.
3.
4.
5.
6a.
6b.
7.
8.
9.
10.
11.
12a.
12b.
13.
14.
15.
16a.
16b.
17.
18.
19.
19a.
19b.
20.
21.
22.
23.
24.
Trade receivables
Monetary financial assets (including cash, bank
accounts)
Non-monetary financial assets
Other
Current assets (1+2+3)
Trade receivables
Monetary financial assets
Other
Non-current assets (5+6+7)
Total assets (4+8)
Trade payables
Monetary other liabilities
Non-monetary other liabilities
Current liabilities (10+11+12)
Trade payables
Non-current liabilities (14+15+16)
Total liabilities (13+17)
Net asset/(liability) position of off-balance sheet
derivative instruments (19a-19b)
Hedged total assets amount
Hedged total liabilities amount
Net foreign currency asset/(liability) position
(9+18+19)
of monetary items (=1+2a+5+6a-10-11-12a-1415-16a)
Total fair value of financial instruments used for
foreign currency hedging
Export
Import
TL equivalent
(functional
currency)
USD
EUR
GBP
242.862.263
15.865.101
70.938.481
196.654
76.038.246
318.900.509
192.938.324
93.597.289
286.535.613
605.436.122
(27.457.608)
(106.228.231)
(341.994.936)
(36.517.338)
(512.198.113)
(44.408.262)
(48.874.707)
(93.282.969)
(605.481.082)
31.703.749
47.568.850
43.853.858
43.853.858
91.422.708
(8.662.260)
(159.450.691)
(168.112.951)
(168.112.951)
2.844.479
73.782.960
65.703.499
65.703.499
139.486.459
(2.582.391)
(36.175.117)
(571.880)
(12.435.668)
(51.765.056)
(15.122.854)
(16.643.864)
(31.766.718)
(83.531.774)
5.731
202.385
202.385
(394.873)
(394.873)
(394.873)
(1.231.950)
169.085.050
(170.317.000)
79.222.719
79.222.719
-
(58.000.000)
(58.000.000)
-
(1.276.910)
2.532.476
(2.045.315)
(192.488)
85.347.086
(76.690.243)
85.034.217
(192.488)
(1.231.950)
225.652.738
440.309.632
79.222.719
64.453.906
104.713.654
(58.000.000)
39.423.455
87.221.937
1.618.704
7.297.100
119
Introduction
Activities
Sustainability
Table of foreign currency position
December 31, 2012
1.
2a.
2b.
3.
4.
5.
6a.
6b.
7.
8.
9.
10.
11.
12a.
12b.
13.
14.
15.
16a.
16b.
17.
18.
19.
19a.
19b.
20.
21.
22.
23.
24.
120
Trade receivables
Monetary financial assets (including cash, bank
accounts)
Other
Current assets (1+2+3)
Trade receivables
Monetary financial assets
Other
Non-current assets (5+6+7)
Total assets (4+8)
Trade payables
Current liabilities (10+11+12)
Trade payables
Non-current liabilities (14+15+16)
Total liabilities (13+17)
Net asset/(liability) position of off-balance sheet
derivative instruments (19a-19b)
Hedged total assets amount
Hedged total liabilities amount
(9+18+19)
of monetary items (=1+2a+5+6a-10-11-12a-1415-16a)
Total fair value of financial instruments used
for foreign currency hedging
Export
Import
TL equivalent
(functional
currency)
USD
EUR
GBP
158.793.258
3.871.728
64.121.523
382.100
139.389.423
298.182.681
59.397.503
61.325.046
120.722.549
418.905.230
(23.416.262)
(331.799.032)
(1.293.435)
(356.508.729)
(5.644.080)
(5.644.080)
(362.152.809)
71.086.883
74.958.611
34.402.023
34.402.023
109.360.634
(2.241.797)
(185.715.363)
(187.957.160)
(187.957.160)
5.339.886
69.461.409
25.257.262
25.257.262
94.718.671
(7.608.276)
(138.031)
(550.000)
(8.296.307)
(2.400.000)
(2.400.000)
(10.696.307)
39.060
421.160
421.160
(532.134)
(145.680)
(677.814)
(677.814)
(62.253.705)
150.763.395
(213.017.100)
74.575.000
84.575.000
(10.000.000)
(83.000.000)
(83.000.000)
-
(5.501.284)
(4.021.526)
1.022.364
(256.654)
63.689.936
(78.596.526)
86.972.364
(256.654)
(62.253.705)
260.308.667
347.213.892
74.575.000
105.282.487
81.805.444
(83.000.000)
31.061.056
80.777.523
1.313.705
5.096.809
Other Information
The following table demonstrates the sensitivity to a possible change of 10% in the USD, Euro and GBP exchange rates, with all
other variables held constant, on the Company’s income before tax as of December 31, 2013 and 2012:
Exchange rate sensitivity analysis table
December 31, 2013
Profit before tax
Profit before tax
Appreciation of
Depreciation of
foreign currency
foreign currency
In case 10% appreciation of USD against TL:
123-
USD net asset/liability
Amount hedged for USD risk (-)
USD net effect (1+2)
540.506
540.506
(540.506)
(540.506)
(600.607)
(600.607)
600.607
600.607
(67.590)
(67.590)
67.590
67.590
(127.691)
127.691
In case 10% appreciation of EUR against TL:
456-
EUR net asset/liability
Amount hedged for EUR risk (-)
EUR net effect (4+5)
In case 10% appreciation of GBP against TL:
789-
GBP net asset/liability
Amount hedged for GBP risk (-)
GBP net effect (7+8)
Total (3+6+9)
Exchange rate sensitivity analysis table
December 31, 2012
Profit before tax
Profit before tax
Appreciation of
Depreciation of
foreign currency
foreign currency
In case 10% appreciation of USD against TL:
123-
USD net asset/liability
Amount hedged for USD risk (-)
USD net effect (1+2)
(716.877)
(716.877)
716.877
716.877
240.429
240.429
(240.429)
(240.429)
(73.680)
(73.680)
73.680
73.680
(550.128)
550.128
In case 10% appreciation of EUR against TL:
456-
EUR net asset/liability
Amount hedged for EUR risk (-)
EUR net effect (4+5)
In case 10% appreciation of GBP against TL:
789-
GBP net asset/liability
Amount hedged for GBP risk (-)
GBP net effect (7+8)
Total (3+6+9)
121
Introduction
Activities
Sustainability
b) Interest position table and related sensitivity analysis
Interest rate risk
As the Company has no significant interest-bearing assets, the Company’s income and operating cash flows are not substantially
subject to changes in market interest rates.
The Company’s interest rate risk arises from short-term borrowings and time deposits. The Company has obtained fixed rate
bearing borrowings and time deposits however the borrowings and time deposits that the Company will obtain in future will be
affected from future interest rates.
As of December 31, 2013 and 2012, the financial liabilities of the Company are consisted of fixed rate bank borrowings.
Capital risk management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in
order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
Consistent with other companies in the industry, the Company monitors capital on the basis of the gearing ratio. This ratio is
calculated as net financial debt divided by total capital. Net financial debt is calculated as total borrowings (including borrowings
as shown in balance sheet) less cash and cash equivalents.
December 31, 2013
December 31, 2012
473.011.272
286.193.001
(8.884.174)
(47.906.245)
Net financial debt
464.127.098
238.286.756
Total equity
273.269.580
241.732.860
170%
99%
Total financial debt
Less: Cash and cash equivalents (Note 4)
Financial debt/shareholders’ equity rate
29. Financial instruments
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These
valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific
estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. Disclosure
of fair value measurements by level of the following fair value measurement hierarchy:
• Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as
prices) or indirectly (that is, derived from prices) (Level 2).
• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
The following table presents the Company’s assets that are measured at fair value at December 31, 2013 and 2012:
Liabilities
Level 1
Level 2
Level 3
Total
December 31, 2013
-
1.231.950
-
1.231.950
Total
-
1.231.950
-
1.231.950
122
Other Information
Liabilities
Level 1
Level 2
Level 3
Total
December 31, 2012
-
2.193.011
-
2.193.011
Total
-
2.193.011
-
2.193.011
Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties,
other than in a forced sale or liquidation, and is best evidenced by a quoted market price, if one exists.
The estimated fair values of financial instruments have been determined by the Company using available market information and
appropriate valuation methodologies. However, judgment is necessarily required to interpret market data to estimate the fair value.
Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current
market exchange. Company considers that carrying amounts reflect fair values of the financial instruments.
Monetary assets - Short term monetary assets are considered to approximate their respective carrying values due to their shortterm nature and low level of credit risk.
Monetary liabilities -Trade payables and other monetary liabilities are considered to approximate their respective carrying values
due to their short-term nature. The fair values of long-term bank borrowings with fixed interest rates are noted that it is close to
approximate their respective carrying values, since the interest rate as of balance sheet date is used. The fair values of shortterm bank borrowings are considered to approximate their respective carrying values due to their short-term nature.
30. Subsequent events
None.
31. Other matters which are significant to the financial statements or which should be disclosed for the purpose of true
and fair interpretation of the financial statements
None.
123
Introduction
Activities
Sustainability
The Information Document pertaining to 2013 concerning
the Annual General Meeting which held on 28th March, 2014
1. Invitation to the Annual General Meeting dated 28th March, 2014
The Annual General Meeting will be held to examine 2013 activities and to discuss the agenda detailed below on Friday, 28th
March, 2014, at the Divan İstanbul Elmadağ, Asker Ocağı Cad. No: 1 Şişli - İstanbul (Tel: 0212 315 55 00) at 3:00 pm.
The financial statements, the Independent Auditor’s Report which was prepared by Güney Bağımsız Denetim ve Serbest
Muhasebeci Mali Müşavirlik A.Ş. (A member firm of Ernst&Young Global Limited), the Corporate Governance Compliance
Report, the Board of Director’s Decision on Profit Distribution pertaining to the 2013 activity year, the below agenda items
and Information Notes on work required to ensure compliance with the Capital Market Board’s regulations will be available to
shareholders at the Company’s Headquarters, on the corporate website at www.otokar.com.tr, the Public Disclosure Platform
and Electronic General Meeting system three weeks prior to the Annual General Meeting within the legal duration.
Providing that the rights and obligations of those shareholders who cannot attend the meeting
personally but who will attend the meeting through the electronic system are reserved, the shareholders are required to
execute their proxies in compliance with the form posted on our Internet site or obtain the form of proxy from Yapı Kredi Yatırım
Menkul Değerler A.Ş. (Yapı Kredi Plaza, Levent, İstanbul), from the offices of the Company or from the Company’s Internet site
at www.otokar.com.tr and, by fulfilling the requirements set forth in “Voting by Proxy and Collection of Proxies via Invitation
Communiqué” numbered II-30.1, present their proxies, the signature on which having been certified by a public notary, to the
Company. Proxies who have been appointed electronically via the Electronic General Meeting System are not required to present
a form of proxy. Proxies that do not comply with the one which is mandatory in the Communiqué and the sample which is
attached will not be accepted under any circumstances, due to our legal responsibility.
Those shareholders who wish to cast a vote via the Electronic General Meeting System are kindly requested to obtain
information from the Central Registry Agency, the Company’s Internet site at www.otokar.com.tr or from the Company’s Head
Office (phone number: 0264 229 22 44) to be able to fulfil their obligations in complying with Regulation on Electronic General
Meetings at Incorporated Companies.
Pursuant to the 4th paragraph of article 415 of the new Turkish Commercial Code No. 6102 and the 1st paragraph of the article 30
of the Capital Markets Law, the right to attend and cast votes at the Annual General Meeting is not dependent on the condition
of depositing the share certificates. Therefore, the shareholders who wish to attend the Annual General Meeting do not need to
block their shares.
Providing that the provisions concerning the casting of votes via an electronic medium in the voting on the Issues listed on the
Agenda in Annual General Meetings are reserved, the method of open voting by a show of hands will be applied.
All beneficiaries as well as representatives of the press and the media are invited to our Annual General Meeting.
In accordance with the provisions of the Capital Market Law, there will be no notice by registered letter to shareholders for
registered shares that are listed in stock market.
Respectfully submitted for the attention of Shareholders.
Otokar Otomotiv ve Savunma Sanayi A.Ş. Board of Directors
Address of the Company’s Centre: Aydınevler Mahallesi, Dumlupınar Caddesi No: 58 A Blok, Küçükyalı - İstanbul
Trade Registry and Number: İstanbul - 83467
Our Additional Disclosures in accordance with the Regulations of the CMB
The additional disclosures that must be applied pursuant with the Capital Market Board’s “Corporate Governance Communiqué”
numbered II-17.1 and which entered force on 3rd January, 2014 and which are related to issues on the agenda, are provided
under the relevant issue of the agenda below, and other mandatory general disclosures are submitted for your attention in this
section.
124
Other Information
1.1. Shareholder Structure and Voting Rights
There are no privileges in our Company’s Articles of Association pertaining to the exercise of voting rights.
The voting rights of our shareholders are presented in the table below:
Shareholders
Koç Holding A.Ş.
Temel Ticaret A.Ş.
Ford Otosan Sanayi A.Ş.
Rahmi M. Koç
Free Float
Total
Amount of Shares (TL)
Stake (%)
Voting Right
Voting Right (%)
10,722,699.81
5,954,943.83
647,274.75
140,599.17
1,171.66
6,533,310.78
44.68
24.81
2.70
0.59
0.00
27.22
10,722,699,810
5,954,943,830
647,274,750
140,599,174
1,171,660
6,533,310,776
44.68
24.81
2.70
0.59
0.00
27.22
24,000,000
100.00
24,000,000,000
100.00
1.2. Information concerning any changes in the management or activity of the Company which may materially affect the
corporate activities of the Company or those of any material subsidiary or affiliate of the Company:
Information on changes in the management or activities which occurred in past accounting periods or which are planned in the
coming accounting periods, and the reasons for such changes, are provided below:
Within the framework of our strategic targets as Otokar Otomotiv ve Savunma Sanayi A.Ş., there were no changes in the
management or activities which could materially affect the activities of the Company during 2013.
1.3. Information concerning the Requests of Shareholders for Inclusion of an Issue into the Agenda:
Information on shareholders’ written requests submitted to the Investor Relations Unit for inclusion of an issue to the agenda,
rejected requests and reasons for rejections in the event that the board of directors did not accept such requests are provided
below:
No such requests were received for the Annual General Meeting, in which the 2013 activities will be discussed.
2. Our remarks on the issues listed in the Agenda of the Annual General Meeting dated 28th March, 2014
1. Opening and election of the Chairing Board
The election of the Chairman who will manage the Annual General Meeting will be carried out in accordance with the provisions
of the “Turkish Commercial Code No. 6102” (TCC) and the “Regulation on the Procedures and Principles Applicable to Annual
General Meetings of Joint Stock Companies and the Representatives of the Ministry of Customs and Commerce to Attend
Annual General Meetings” (the “Regulation” or the “General Meeting Regulation”).
2. Reading, discussion and adoption of the 2013 Annual Report which was prepared by the Board of Directors of the
Company
Information will be provided concerning the Annual Report 2013, which also contains the report on compliance with the
principles of corporate governance, which was made available to shareholders for review at the Company’s Head Office, on the
Electronic General Meeting portal of the Central Registry Agency and on our Company’s Internet site at www.otokar.com.tr for
three weeks preceding the Annual General Meeting, in accordance with the TCC, the Regulation and the regulations concerning
the Capital Markets Law. The 2013 Annual Report will be submitted for the opinion and approval of the shareholders.
3. Reading of the Independent Auditor’s Summary Report concerning the 2013 accounting period
Information concerning the Independent Auditor’s Report prepared pursuant to the regulations of the Capital Markets Board and
the TCC, which were made available to the shareholders for their review at the Company’s Head Office, on the Electronic General
Meeting portal of the Central Registry Agency and on our Company’s Internet site at www.otokar.com.tr will be provided to the
Annual General Meeting.
125
Introduction
Activities
Sustainability
4. Reading, discussion and adoption of the Financial Statements pertaining to the 2013 accounting period
Information concerning our financial reports and statutory financial statements which were made available to shareholders for
their review at the Company’s Head Office, on the Electronic General Meeting portal of the Central Registry Agency and on our
Company’s Internet site at www.otokar.com.tr for three weeks preceding the Annual General Meeting pursuant to the TCC, the
Regulation and the regulations concerning the Capital Markets Law will be provided, and the same will be submitted to the
opinion and approval of the shareholders.
5. Acquittal of the members of the Board of Directors in respect of the activities in 2013
Release of the members of the Board of Directors in respect of the activities, transactions and accounts in 2013 as per the
provisions of the TCC and the Regulation will be submitted to the approval of the Annual General Meeting.
6. Submission to approval of the Company’s “Profit Distribution Policy” regarding 2013 and subsequent years, pursuant
to the regulations of the Capital Markets Board
The Company’s profit distribution policy as attached herewith in ATTACHMENT 1 will be submitted for the attention of the
General Meeting. In addition, the profit distribution policy was made available at the Company’s Head Office, on the Electronic
General Meeting portal of the Central Registry Agency and under the investor relations section of the Internet site of the
Company at www.otokar.com.tr for three weeks preceding the Annual General Meeting.
7. Adoption, adoption as revised or rejection of the proposal of the Board of Directors for distribution of the 2013 profit
and the date of the profit distribution
According to the financial statements for the account period of 01.01.2013-31.12.2013, which were prepared in compliance
with the International Financial Reporting Standards in accordance with the Turkish Commercial Code and Capital Market
Regulations, and audited by Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. (a member firm of Ernst &
Young Global Limited), the Company earned a “Non-Consolidated Net Profit in the Period” amounting to TL 96,561,743. The
table regarding our profit distribution proposal which was prepared by taking into account our long term group strategies, and
the Company’s capital requirements, investment and financing policies, profitability and the liquidity position in line with the
Communiqué on Profit Distribution and the Profit Distribution Guide, which was announced in accordance with this communiqué
is provided in ATTACHMENT 2. The recommendations of the Board of Directors will be submitted for the attention and approval
of our shareholders.
8. Determination of the number and office terms of the Members of the Board of Directors, election of the members
according to the number of members as determined and the election of the Independent Members of the Board of
Directors
New members will be elected to take the place of the existing members of the Board of Directors whose office term has ended in
accordance with the principles applicable to the election of the members of the Board of Directors as set forth in the Company’s
articles of association pursuant to CMB regulations, the TCC and the relevant regulations. In addition, independent member(s)
will be elected to the Board in order to ensure compliance with the Communiqué numbered II-17.1 of the CMB.
Pursuant to the article 11 of the articles of association, the Company is administered by a Board of Directors formed by minimum
5 (five) members who are elected for maximum 3 years at the Annual General Meeting as per the provisions of the Turkish
Commercial Code. The renewal of the terms of the Board of Directors may be approved in the Annual General Meeting even if
the office term of it has not yet ended.
Three of the persons nominated as members of the Board of Directors must meet the criteria of independency as defined in the
mandatory Corporate Governance Principles of the CMB.
Upon the proposal of the Corporate Governance Committee, which evaluated the candidates presented to it, İsmet Böcügöz,
Abdulkadir Öncül and Ahmet Nezih Olcay were nominated by the Board of Directors as the Independent Members of the Board
of Directors.
The Curriculum vitae of the nominees for the Board of Directors and independence declaration of nominees for independent
members are provided in ATTACHMENT 3.
126
Other Information
9. Provision of information concerning the “Compensation Policy” for Members of the Board of Directors and the top
level Executives, and concerning the payments made in accordance with the Principles of Corporate Governance to the
Shareholders and their approval by the Shareholders
Pursuant to the mandatory Corporate Governance Principle no. 4.6.2 of the CMB, the principles applicable to the compensation
of the members of the Board of Directors and the senior management must be in writing and submitted to the attention of the
shareholders as a separate item of the agenda, and the shareholders must be given the opportunity to express their views on
this issue during the Annual General Meeting. The compensation policy prepared to this end is provided in ATTACHMENT 4. As
stated in footnote 27 to the financial reports regarding the 2013 activity year, benefits amounting to a total of TL 11,649,528 were
provided by Otokar Otomotiv ve Savunma San. A.Ş. to the senior management during 2013.
10. Determination of the monthly remuneration to the members of the Board of Directors
The amount of the monthly gross remuneration to be paid to the members of the board of directors during 2014 in accordance
with the Compensation Policy as submitted to the approval of the shareholders in line with agenda item no. 9, which will be
determined by the shareholders.
11. Approval of the selection of the Independent Audit Firm by the Board of Directors pursuant to the Turkish Commercial
Code and the regulations of the Capital Markets Board
In its meeting held on 27th February, 2014, the Board of Directors resolved to select, in consultation with the Committee in charge
of Audits, Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi (a member firm of Ernst & Young
Global Limited) to audit the financial statements of the Company pertaining to the 2014 accounting period and to carry out the
other tasks under the relevant regulations in accordance with the Turkish Commercial Code and the regulations of the Capital
Markets Board. This selection will be presented to the approval of the Annual General Meeting.
12. Provision of information to Shareholders concerning transactions executed with the related parties during 2013 in
line with the regulations of the Capital Markets Board
In accordance with article 10 of the Capital Market Board’s (CMB) Communiqué numbered Serial II.17.1., the principles
applicable to any common and continuous transactions of corporations whose shares are traded on the BIST are reported by
the board of directors. If the amount of buy-side transactions in the cost of sales reaches or exceeds 10% of the amount in sales
in any accounting period, as stated in its latest annual financial statements disclosed to the public, the board of directors of the
corporation must prepare a report on the conditions of such transactions with a comparison of the market conditions. Disclosing
this report in KAP is mandatory.
Our shareholders are informed, within this context, of our qualified related party transactions in 2013. Prepared reports are
provided in Attachment 5.
13. Provision of information to Shareholders concerning the Company’s donations in 2013 and the establishment of an
upper limit for donations to be made in 2014
According to the Capital Market Board’s Dividend Communiqué numbered II-19.1, the limit of donation should be determined
by the General Meeting in the event that it is not mentioned in the articles of association. Donations and payments provided are
required to be submitted for the attention of shareholders in the Annual General Meeting. The donations provided to foundations
and associations amounted to TL 2,038,442 in 2013. In addition, the limit of donation to be made in 2014 will be determined in
the Annual General Meeting.
14. In accordance with the regulations of the Capital Market Board, provision of information to Shareholders concerning
collateral, mortgages and guarantees that are given on behalf of third parties and income or benefits received
In accordance with article 12 of Capital Market Board’s Corporate Governance Communiqué numbered II-17.1, information must
be provided on collaterals, mortgages and guarantees that are given on behalf of 3rd parties and income or benefits received. Our
company has no collateral, pledges, mortgages or guarantees given to assure 3rd party debts to execute our Company’s ordinary
commercial activities.
127
Introduction
Activities
Sustainability
15. The granting of consent to shareholders who control the management, to the members of the Board of Directors and
the senior management who own shares in the capital of the Company and to spouses and up to a third level of blood
relative and the in-laws of these persons, as per articles 395 and 396 of the Turkish Commercial Code, and the provision
of information to shareholders concerning any transactions of this nature executed during 2013, pursuant to the CMB’s
Corporate Governance Communiqué
Execution of transactions by the members of the Board of Directors within the framework of the first paragraph of article 395,
entitled “Prohibition of Execution Transactions with the Company and on Borrowing from the Company”, and article 396, entitled
“Prohibition on Competition”, of the TCC is possible only with the consent of the shareholders at the Annual General Meeting.
Pursuant to the mandatory Corporate Governance Principle no. 1.3.6 of the CMB, in order that the shareholders who control
the management, the members of the Board of Directors, the followings are taken into consideration as a separate item in the
Annual General Meeting and recorded in minutes of the Annual General Meeting: the senior managers’ and the spouses’ and up
to second degree blood and in-law relatives of these persons’ transactions which may cause a conflict of interest and compete
with the company or any affiliates of the company, and/or conducting the commercial transaction in the company’s or any
affiliates’ field on conducting this transaction on behalf of other people or entering as a partner to the corporation that has same
commercial business
Required permission will be submitted to the approval of our shareholders in the Annual General Meeting. Also, our shareholders
will be informed of such transactions made within the year.
16. Requests and views
ATTACHMENTS:
Attachment 1Profit Distribution Policy (Please refer to page....)
Attachment 2
Profit Distribution Table pertaining to Distribution of the Profit in 2013 (Please refer to page....)
Attachment 3
Curriculum Vitae of the Nominees to the Board of Directors and Independence Declarations of Independent
Member Nominees (Please refer to page....)
Attachment 4 Compensation Policy for Members of the Board of Directors and Senior Management (Please refer to page....)
Attachment 5 Report on Related-Party Transactions (Please refer to page....)
128
Otokar Otomotiv ve Savunma Sanayi A.Ş.
Head Office
Aydınevler Mah. Dumlupınar Cad.
No: 58 A Blok 34854
Küçükyalı İstanbul - Turkey
Tel: +90 216 489 29 50
Fax: +90 216 489 29 67
Factory
Atatürk Cad. No: 6 Arifiye 54580
Sakarya - Turkey
Tel: +90 264 229 22 44
Fax: +90 264 229 22 42
www.otokar.com.tr
Produced by Tayburn
Tel: (90 212) 227 04 36
www.tayburnkurumsal.com

Notes to the financial statements as of December 31, 2013

Transcription

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